Warehouse

Management
Unit 03
Learning Outcomes
At the end of the lecture you should be able to;
• Identify differences between a Warehouse and DC
• Name types of warehouses
• Explain the role of a warehouse
• Describe the functions of a warehouse
• Explain warehouse designing process
• Name MHEs
• Describe the ways of effectively using warehouse soace
• Outline WH costs
Outline
• Warehouse Vs Distribution Center
• Rationale for Warehouses
• The role of warehousing
• Basic components of a Warehouse
• Functions of a Warehouse
• Types of Warehouses
• Number of Warehouses
• Warehouse Design
• Loading Dock equipment and MHE
• Warehouse productivity
• Factors influence in effective use of warehouses
• Cube utilization and accessibility
• Stock location
• Order picking and assembly
• Physical control and security- Elements
• Warehouse information Systems
• Electronic Data Interchange (EDI)
• Automatic Data Collection (ADC)
• Radio Frequency Systems
What is a Warehouse
• Is a commercial building for mainly storage of goods
• It is involved in various stages of sourcing, production
and distribution of goods
• From RM handling, WIP through FGs
• Warehouses are important links between production
sites and the customer
• Need for faster customer response
• Fluctuations in customer demand
• Increase in the frequency of orders
• Decrease in the size of the orders
• Increase in product proliferation
Why Warehousing
Consolidation
• Combine small shipments (LTL) from multiple
suppliers into a larger shipment
• More likely to make FTL
Break-bulk
• Receive large shipments as FCL or FTL
• The loads are broken down into small individual
orders and deliver for multiple destinations
Benefits of Consolidation and
Break Bulk
• Reduced transportation cost
• Higher vehicle utilization
• Reduced congestion at customer’s dock
• Lowest freight rate
• Economies of Scale is achieved by transporting a
larger consolidated shipment
Cross docking
• is an activity whereby goods are received at a
warehouse and dispatched without putting them
away into storage.
• with limited value added services and minimum
stay at warehouses
Role of a Warehouse

• Inventory holding point

• Consolidation center
• Cross dock center
• Sortation center
• Assembly facility
• Transhipment point
• Returned goods center

Warehouse often fulfils a mix of these different roles

Types of Warehouse
By product
type

By By the
company stage in the
usage SC

By
By area
Ownership
Warehouse
Types

By
geographic By height
area

By
By function
equipment
Warehouse Vs Distribution Center
Warehouse Functions
• Receive goods
• Reserve storage
• Order picking
• Sortation
• Collation and Value Added Services
• Marshalling and Dispatch
• Receiving- This typically includes unloading of
incoming transport, checking against Delivery Note and
updating records in Warehouse Management System.
It may have activities such as unpacking and repacking
in a format that suitable for the subsequent
warehouse operations.

• Reserve storage – This area holds the bulk of

warehouse inventory. When required the goods are
taken from reserve storage either directly to dispatch
or to replenish picking area
- One pallet of items in picking area
for case picking
• Order picking – When an order is received goods need to be
retrieved from the warehouse in the right quantity and in
time to meet the required service level.

• Sortation - Batching smaller orders together and treat them

as one order for picking purpose needs to sort down them
into individual orders before dispatching.

• Collation and Value Adding Services-

Goods that picked needs to be collated into complete
customer orders ready for dispatch.
Unless the goods are picked into a dispatch container, they
need to be assembled or packed together after picking.
• Marshalling and Dispatch- Goods are marshalled
together to form outgoing vehicle loads for
dispatch to the next node of the Supply Chain.
Receiving
• The receipt of goods into a warehouse needs to be
a carefully planned activity
WHY …..?
• Accept goods from transportation company or
attached factory
• Check the goods against the Delivery Notice
• Check the quantities/ counts/ weighs
• Check for damage and fill out damage report if
necessary (Visible damages including torn or
dented cartons, broken packages)
• Inspect goods if required
• Completing paper work and updating the system
Order Picking
• Most labour intensive process in a warehouse
• Physical procedure of retrieving stock keeping units
(SKU) from specified storage locations to satisfy the
customer demands in the fastest and cheapest way
• Order picking activities involve
• Taking the customer order
• Searching for the requested SKUs
• Retrieving the requested SKUs
• Transporting the requested SKUs
Order Picking Methods
• Area system- Order picker circulates throughout the
warehouse selecting items in an order
Order is ready to ship when picker is
finished
• Zone system – Warehouse is divided into zones and each
picker works only in an assigned zone
Order is divided into zones and the items
from each zone are sent to the
marshalling area
• Multi order system – Same as the zone system except that
each picker collects items for a number of
orders at the same time
Order picking technologies
• Pick to light – Consists lights and LED displays for
each pick location. The system uses software to
light the next pick and display the quantity to pick

• Pick to voice- The operator is directed what and

how many to pick by voice, operator also respond
by voice
• Automated order assembly systems
• Pick modules
Factors affecting the efficiency of
order picking
• Warehouse layout
• Employee experience
• Picking method
• Location of the SKUs
• Extent of automation
Marshal the Shipment
• Checker counter checks picked stocks in the loading
area against pick list
Collation and Value Adding
Services
• Goods need to be collated into complete customer
orders ready for dispatch
• Unless the goods are directly picked into the dispatch
containers, they will be assembled or packed together
after picking.
Ex: The goods may be passed to a packing
station where they are packed into a carton.
Then these items may be shrink wrapped
on to a wooden pallet ready for transit.
Dispatch Process
• After order is picked, the goods for a particular
order need to be brought together and made ready
for dispatch
• This may involve value added activities like
labelling, tagging, assembly, packing into cartons
• Then, the goods need to be sorted to vehicle loads
and placed into unit loads.
• In the case of goods being dispatched in pallets, the
whole pallet may be shrink wrapped so that the
goods do not move during transportation.
• Then the goods need to be transported to the
appropriate marshalling area based on the
outgoing vehicle schedule

• Dock levellers- allow the floor of receiving dock to

be level with trailer body
• Vehicle with own loading bay (image)
Warehouse Activities
• Receive goods
• Identify goods
• Inspecting
• Dispatch goods to storage
• Hold goods
• Pick goods
• Collate shipment
• Marshal shipment
• Dispatch shipment
• Operate an Information System
Number of Warehouses
• More than one may required to minimize the risk
• Is determined based on the operational
requirements
• Based on the throughput of the client/s
Warehouse Material Flow
Warehouse Layout
Exercise
• Draw a detailed warehouse process considering
generic warehouse operation
 Receiving
Schedule Carrier
Unload vehicle
Cross check with ASN/ Deliver
notice
Inspect for damages

Put Away
Identify product Storage
Identify product location Reserve storage/ case picking
Move products area
Update records Stock location

Shipping Preparation Order Picking

Sorting for orders Pick list
Packing Picking
Labelling Collation and Sortation
Stacking
Shipping
Schedule carrier
Load vehicle
Documentation
Record updating
Types of Warehouses
based on Ownership
Private Warehouses
• Typically operate firm owning products
• The building can be owned or leased
• Greater control, flexibility and cost advantage
• Are declining due to growing interest in reducing
logistics assets
• Are relatively fixed, difficult to change the location
Public Warehouses
• Hire basis for a short or long term
• Stores goods of others
• Provides flexibility and shared service benefits
• Have the potential to offer operating and
management expertise
• Lower operating cost due to shared resources,
better productivity and economy of scale
• Leverage transportation by delivering consolidated
shipments
Contract Warehouse
• Combines characteristics of both public and private
warehouses
• Provides the benefits of expertise, flexibility,
economies of scale, labor, equipment and
information systems
Multi client warehouse
• Multi clients get the service of 3PL provider
Loading dock equipment &
Material Handling
Equipment
 Pallets
• Most common form of unit loads
stored in warehouses
• Are raised flat platforms on which
goods can be stored
• Most are made of wood
• To lift and move design is enabled
to insert forks of forklifts
• If entry can happen from all four
sides it is said four way entry
pallets
• There are various standard sizes
are in use depending on the
region of the world
 Tote bins
• Are used for storage and handling of small parts
• They may be open top or have a closable lid
Slip Sheets
Why Slip Sheets over pallets
• Allows 12-15% more products in material handling
containers
• Do not require maintenance
• Decreases loading, unloading time by up to 60%
• Saving shipping weight (weighs 20 times less than
wooden pallets)
• Significant reduction in material handling cost
• Can be customized to fit any size of load
• Reusable
Disadvantages of using slip sheets
• When used alone, pallets provide more structural
support than slip sheets
• Requires special slip sheet attachment on
transportation devices
• Hand pallet truck- Is a truck with two folks that fit into the
slots of a pallet
The folks can be raised slightly to lift a
pallet off the floor
Truck can be pulled manually and the
pallet deposited at the required
location
Is useful for infrequent movements over
short distances
• Powered pallet truck
Is similar to the above, except it is
battery powered
May have a platform or a seat for the
operator to stand or sit
• Conveyors - Comprise a series of rollers inclined at
a slight angle
When a pallet is positioned on the
conveyor, it rolls forward to an end
stop
• Automated Guided Vehicles (AGVs)- These are
battery powered, computer controlled
trucks
Are normally used for moving pallets
Warehouse Design
Design Procedure
• Identifying business requirements
• Role of the warehouse (Storage, Cross docking, VAS)
• Throughput level, storage capacity
• Customer service level
• Product
• Nature of the product
• Dimensions/ Unit load weight
• Quantity throughput
• Value throughput (to the business)
• Seasonality
• Number of order lines
• Inventory turnover
• Order characteristics
• Order frequency (by season, week, day and time)
• Number of order lines for each SKU
• Order profile (lines per order/ units per order line)
• Time profile (percentage of orders received by week, by day and by
hour)

• Design constraints
• Financial constraints (On capital expenditure)
• Corporate policies ( IT, environmental)
• Local authority (maximum building height, working time, noise)
• Government (OHS, Working time, Packaging regulations)
• Fire (evacuation, fire exits, fire/smoke containment)
• Insurance company ( over head or in rack sprinklers, fire detectors)
• Receiving and Dispatch patterns
• Number of vehicles per day and by hour
• Types of vehicle
• Unit load type (Palletised)
• Volumes per dispatch route
• Own vehicles or Third party
• External area requirement
• Security facility
• Parking, Manoeuvring area
• Vehicle wash and fuelling point
• Site and building details
• Location, access and ground conditions
• Building dimensions
• Cost data
• Rent and rates
• Building maintenance and security
• Heat, light and power
• Wage rates and shift premiums
• Equipment cost, depreciation cost and maintenance cost

• Building spans, column pitches, required clear operational heights,

floor flatness tolerance
• Dock area design for vehicle loading and unloading, whether raised
or level access
• The location of offices, battery charging area, pump room (for
sprinklers), wash rooms, facilities for delivery and collection drivers
Mezzanine Floor
• Is an elevated floor or a platform that is installed
between the ceiling and the floor
• Unused vertical space of the warehouse can be
effectively used
Factors influencing effective use
of warehouse space
• Cube utilization and accessibility
• Stock location
• Order picking and assembly
• Physical control and security elements
Warehouse Design Considerations
• Number of floors
• Ideally there should be a single floor
• Movement would result in waste of time and energy
• But if land is scarce, more than one floor can be used
• Height Utilization
• Should utilize as much as it is safe to lift and store the
material
• Minimize the aisle space as much as possible and to
manoeuvre the MHE
• Product flows
• Product floor should be straight
• This means goods should enter from one door and exit from
another door ensuring that the paths are not crossed
Cube Utilization and Accessibility
Stock Location
• To provide the required customer service
• To keep track of where the items are stored
• To minimize the efforts to receive, put away and
retrieve the items

Ex:

• Group functionally related items together

• Group fast moving items together
• Group physically similar items together
Order picking and Assembly
• When an order is received , items must be obtained
from the warehouse, grouped and prepared for
shipment.
Physical control and 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
Safety Hazards in a Warehouse
• Heavy equipment accidents
• Slips
• Falls
• Fires
• Crushed
• Exposure to harmful substances
• Ergonomics
• Falling objects
• Lack of safety education
Safe handling of Goods in
Warehouses
• In rack sprinkler system
• Smoke detector and Alarm system
• Specific and well trained personnel
• AC motor driven MHE
• Confined storage area for aerosols equipped with
Motorized Shutter Door
Costs of Operating a
Warehouse
Capital Cost
• Cost of building, land, Material handling equipment
Operational Cost
• Wages cost
• Utility
• Over time cost
• Meal cost
Maximize Productivity and
Minimize Cost
• Maximize use of space
• Both Horizontal and Vertical
• Mezzanine floors

• Effective use of labor and equipment

• Labor is the largest operating cost
• MHE is the second largest capital cost
Warehouse Information
System
Operating 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
WMS
• WMS is used to achieve advantages such as
productivity, speed and accuracy
• Is linked with company’s ERP system
• Operational functions of a WH
• Thousands of orders receive in a day
• Thousands of SKUs
• Consolidation and Packing of individual orders
• Hundreds of vehicles to collect orders
Bar Code
RFID- Radio Frequency
Identification
• Item identification happens means of radio waves
• It comprise with a tag and a reader
• RFID tag contains an Integrated circuit and an
antenna, which are used to transmit data to the
RFID reader
• Then reader converts data into more useable form
• Information collected from the tags is then
transferred through a communication interface to a
host computer system, where the data can be
stored in a data base
Summary