Warehousing and Inventory

WAREHOUSING
AND
INVENTORY
Copyright 2006 © Fritz Institute. All Rights Reserved.
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COPYRIGHT STATEMENT
All rights reserved. No part of this publication may be reproduced or
transmitted in any form or by any means electronic or mechanical, including
photocopying, recording, or by any information storage and retrieval system,
without permission in writing from the Fritz Institute.
The Fritz Institute would like to recognise the assistance of the following organisations in providing
kind permission to use their materials in this document.
People Development Group for providing use of existing warehouse and inventory training materials.
BT Industries for the use of photographs on pages: 41, 42, 43, 51 and 52.
World Health Organisation for the use of the photograph on page 12.
World Food Programme’s photograph library for the use of photographs on pages 15 and 18.
International Federation of the Red Cross for the use of photographs on pages 31, 33, 35 and 39.
International Committee of the Red Cross for the use of tables on pages 25 and 27.
Fritz Institute
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United States of America
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INTRODUCTION
Welcome to the Warehouse and Inventory unit of the Certification in Humanitarian Logistics course.
During this unit, you will be looking at the function of warehouse and inventory management.
The unit will look at the need to set up and manage warehouse operations appropriate to the
situation, environment and resources available, as well as explaining the short and long term needs
to store and manage inventory.
UNIT AIMS AND STRUCTURE

The aim of this unit is to provide the foundation skills and knowledge in the function warehouse and
inventory management performed by people working in logistics/supply chain in humanitarian
organisations.
This unit is designed to help you develop an understanding of :
The function of warehouse and inventory management.

Setting up a warehouse.
Managing warehouse operations.
The provision and care of warehouse operations.
Managing of inventory.
This unit has been structured into ten modules :
Module 1 : The Function of Warehouse and Inventory Management.

Module 2 : Identifying Warehouse Requirements.
Module 3 : Selecting Equipment and Working Methods.
Module 4 : Planning Space and Layout.
Module 5 : Planning Resource Requirements.
Module 6 : Managing Warehouse Operations.
Module 7 : Care of Warehouse Resources.
Module 8 : Managing Inventory Levels.
Module 9 : Stock Control and Movements.
Module 10 : Stock Records.
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WAREHOUSING MODULE 1 CONTENTS: PAGE NO:
The Function of Warehouse and
AND Inventory Management
INVENTORY
Warehouse and Inventory in 7
Humanitarian Supply Chains
The Functions of Warehouse 19

and Inventory Management
Procedures and Policies 22
MODULE 2
Identifying Warehouse General Requirements 24
Requirements
Understanding the Product 24

Characteristics
Taking Account of Local 30

Legislation
Selecting a Suitable Location 30
Leasing Temporary Warehouses 35
MODULE 3 Planning Work Phases 37

Selecting Equipment and Working
Methods
Selecting Handling Equipment 39
Selecting Storage Equipment 45
Defining Work Methods 48
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MODULE 4
Planning Space and Layout Sizing the Bulk Storage Area 56
Sizing the Goods Receipt Area 61
Sizing the Goods Despatch Area 62
Sizing the Picking Area 63
Warehouse Flow and Layout 63
Goods Location in the Bulk 65

Storage Area
MODULE 5 Work Cycles 69

Planning Resource Requirements
Example - Estimating Resources 70

for the Goods Receipt Activity
MODULE 6
Managing Warehouse Operations Planning the Workload 76
Allocating Resources 79
Receiving Goods 82
Storing Goods 87
Assembling Consignments 88
Despatching Consignments 90
Disposal of goods 91
Pest Control 92
Defining the Control 93

Requirements
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MODULE 7 Planned Maintenance 98
Care of Warehouse Resources
Maintain Equipment 99
Maintain Building 100
Complete Maintenance Records 101
MODULE 8 Types of Inventory 102

Managing Inventory Levels
Stock Time Curve 103
Using Forecasts 107
Push and Pull Inventory Policies 109
Ordering Systems 109
MODULE 9 Monitoring Goods in Transit 116

Stock Control and Movements
Controlling Stock Movements 117
MODULE 10 Stock Identification 122

Stock Records
Stock Cards 123
Bin Cards 124
Stock Checks 125
Stock Loss 127
Reporting Stock Levels 127
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MODULE 1 : THE FUNCTION OF WAREHOUSE AND INVENTORY
MANAGEMENT
This module introduces the role of warehouse and inventory management in humanitarian
organisations. In this module we will look at :
Warehouses and inventory in humanitarian supply chains.

The functions of warehouse and inventory management.
Procedures and policies.
WAREHOUSES AND INVENTORY IN HUMANITARIAN SUPPLY CHAINS

In the first unit of the course we explored the purpose of humanitarian supply chain activity. You will
recall that this purpose is to deliver goods to beneficiaries at the time and place where they are
needed. The role of warehouse and inventory management is to make the goods available to be
delivered. To help with making the goods available warehouses are used to store goods between
the times of delivery from suppliers until the goods are required to be delivered onto the next stage
in the supply chain and ultimately, to the beneficiaries.
The diagram shows an example of a humanitarian supply chain. The global warehouse is the start of
two supply chains illustrated by the red and white arrows.
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A simple definition of a warehouse is as follows :
‘A warehouse is a planned space for the storage and handling of goods and material.’
However, in humanitarian supply chains, warehouses vary greatly in terms of their role and their
characteristics.
Global warehouses are relatively permanent operations and tend to be housed in large purpose built
buildings. They are run by permanent people who have been trained in all the skills necessary to run
an efficient facility. The information systems are computer based and may use the most
sophisticated software to help in the planning and management of the warehouse. The operating
situation is relatively stable and management attention is focussed on the efficient and cost effective
running of the warehouse operation.
Warehouses in the field, catering directly for beneficiaries, tend to be very different. They tend to be
smaller and temporary. They may be housed in a building which was not designed to be used as a
warehouse or in a temporary building, sometimes little more than a tent in a field. The staff may be
volunteers who have never worked in a warehouse before and any ‘system’ is more likely to be
paper based. The situation may be chaotic and dangerous and the humanitarian need may be very
urgent. Therefore, the management style must be practical and action oriented with a focus on
making the humanitarian goods available as much as possible.
Although the operational situation varies dramatically in humanitarian supply chains, the basic
principles of warehouse and inventory management are the same throughout. Therefore, the role of
the warehouse/inventory manager is to adapt and apply these principles as much as possible, given
the operational situation, in order to best achieve the objectives of that particular operation, whatever
they might be.
We will explore in detail what happens in a warehouse, but before doing so we need to understand
why we need a warehouse and why we need inventory.
WHY DO WE NEED WAREHOUSES?
First consideration of this question will doubtless lead to the conclusion that a warehouse is needed
to be able to store things. Whilst, this is true there are also other uses. These include usage:
As a transit point
For dividing bulk deliveries
For combining different goods
To provide speedy response
To protect inventory
Let’s look at each in turn.
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AS A TRANSIT POINT
Warehouses act as places to hold goods between the time of delivery from suppliers and the time of
the onward journey to the next stage in the supply chain and ultimately to the beneficiaries.
FOR DIVIDING BULK DELIVERIES
In general, goods are delivered from suppliers in bulk/large quantities and these quantities are often
much larger than the size of consignments required for onward delivery to beneficiaries. Therefore,
warehouses act as places for dividing bulk deliveries into smaller quantities for onward delivery.
FOR COMBINING DIFFERENT GOODS
In order to meet the needs of beneficiaries, it is normal that a range of goods are required and that
these are purchased from a number of different suppliers. However, beneficiaries normally require a
mixture of the goods that have been purchased, e.g. a selection of foodstuffs, together with some
cooking equipment. Therefore, we typically need to combine a selection of different goods to make
up consignments ready for delivery to beneficiaries.
Sometimes, a number of different items may be packaged together into ‘kits’ before being delivered
to beneficiaries.
TO PROVIDE A SPEEDY RESPONSE
In responding to a humanitarian need, the speed of response is often important. Since the
transportation time can form a large part of the response time, it may be necessary to store
inventory physically close to the beneficiaries. So for humanitarian organisations that have a large
geographical coverage, it may be necessary to store inventory in a number of warehouses in various
locations around the world.
FOR PROTECTING INVENTORY
Warehouses provide a physical barrier which helps protect inventory from theft and keeps the
inventory in good condition by preventing damage from pests and the weather. Within the
humanitarian environment this is a particularly important role, since it provides a secure place for
storage in potentially unsafe surroundings. Not only does this provide safe conditions for the goods,
but it also provides safe working conditions for the people performing warehouse tasks. By choice
one may not choose to locate a warehouse in such an insecure place, but the nature of the aid
situation imposes the requirement to allow the ability to respond to be developed.
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WHY DO WE NEED TO KEEP INVENTORY?
In answering the question of why we need a warehouse we discovered that all of the uses involved
activities related to goods. This then suggests we explore why we need the goods, which we more
commonly term inventory. Again there are several reasons :
To decouple supply and demand.

In anticipation of an increase in demand.
To protect against uncertainty in supply and demand.
TO DECOUPLE SUPPLY AND DEMAND
Managing inventory is essentially about balancing supply and demand. This job would be very easy
in a situation where :
We know exactly in advance what humanitarian goods will be required.
There is enough time to order goods from suppliers and have the goods in stock ready to
meet the need.
Suppliers deliver exactly when we need it and in full.
In such a situation there would be no need for a buffer since we could order from a supplier and ship
it on to beneficiaries in time to satisfy their need.
Of course this ideal situation does not exist in most cases. For some goods, supply is seasonal,
perhaps as a result of a harvest, but the associated demand is constant throughout the year. In
other situations it may be that supply is constant, but the demand is erratic and the required time to
supply is too short to allow us to make or acquire the items. In these cases, inventory has to be
created to allow the beneficiaries’ needs to be satisfied.
IN ANTICIPATION OF AN INCREASE IN DEMAND
Anticipation stocks are built up to meet a planned or expected increase in demand. The most usual
example of this would be the occurrence of a humanitarian event. In such a situation, speed of
response is important and in most cases, the humanitarian need does not allow time for stocks to be
purchased before being distributed to the places where it is needed.
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TO BUFFER AGAINST UNCERTAINTY OF SUPPLY AND DEMAND
The level of demand for humanitarian goods in the future cannot be known with absolute certainty.
At the same time, the timing and volume of supplies is always uncertain to some extent. Therefore,
given that the purpose of humanitarian supply chains is to meet the demand for humanitarian goods,
inventory is held as a buffer in case demand is higher than expected or in case supplies are later or
less than expected, or both.
WHAT HAPPENS IN A WAREHOUSE?
Now that we are sure that we need a warehouse let’s look at what happens inside one. A warehouse
operation can be broken down into four main areas/activities :
Goods Receipt.
Bulk Storage.
Picking, kitting and repacking.
Goods Despatch.
These four phases of activity have a natural flow. Firstly, goods are received and after checking
they are placed into storage. After a period of time they will be retrieved (picked) and then
despatched. Sometimes at the retrieval stage goods can be combined together and repacked to
form kits. These kits can then be despatched immediately or returned to storage until they are
required. The diagram below illustrates this flow and we will then examine each phase in more
detail:
Goods Goods
Storage Picking
Receipt Despatch
Kitting
Repack
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GOODS RECEIPT
The most important feature of the goods receipt area is the ability to receive, check and distribute
into the main storage areas as quickly and efficiently as possible.
Often the goods receipt area can be very busy with lots of people present including drivers. As this
photograph shows controlling the movement in an orderly manner can therefore be a challenge.
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The extent to which this activity can be planned and managed depends on the visibility that the
warehouse manager has of the arrival of goods at the warehouse. Visibility of arrivals depends on
good communication with the sender about the quantity and timing of goods deliveries.
In the ideal situation, there will be a system where deliveries are allocated time slots to arrive at the
warehouse and the warehouse manager will plan the space and people required to achieve an
orderly arrival and handling of the goods.
However, it is possible for goods to arrive without warning and at unexpected times. Also, the
quantity of goods received may be much larger than expected. In these situations, there is a risk of
congestion in the goods receipt areas - in both the control of the vehicles bringing in the product and
on the goods receipt bays in general. Therefore, the warehouse manager must adopt a flexible
approach to the use of space in the warehouse and of warehouse resources, both people and
equipment.
Typical activities involved in goods receipt are :
Establish the correct unloading area and ensure it is safe and suitable for the operation.
Record the arrival of the vehicle and note the seal number (if applicable).
Break the seal with the driver present wherever possible.
Check the documentation and record each item against the consignment note.
Ensure that the vehicle is safe before unloading.
Assemble the goods if necessary in a goods receipt assembly area.
If necessary, transfer from delivery pallets and cages to internal means of moving and
handling the goods.
Check the goods for condition, possible damage and where appropriate carry out required
quality checks.
Report discrepancies and condition/quality problems at once.
Determine the location in which the goods are to be stored and move them out of the goods
receipt area as quickly as possible.
The goods receipt working area must have sufficient space for the above processes. A quarantine
area might also be required for holding goods awaiting quality control clearance. An area might also
be needed to hold goods that have been rejected and are waiting to be sent back or destroyed.
The prime objectives of the receiving area should be to :
Receive materials/goods from internal/external suppliers, unload the vehicle as quickly and
efficiently as possible and make available for storage.
Check that the quantity, type and condition of the materials/goods are as specified in the
order.
Make provision for any quality control activity required by the organisation.
The factors which will influence the level of labour requirements are :
The frequency of the deliveries and the volumes of the goods to be received.
The methods used to receive the goods and make them available for storage.
The certainty of operations and the availability of labour.
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The frequency and volume of goods to be received can be established by analysing the past and
forecast demand for goods and this information can be used to calculate the labour requirements for
the goods receipt operation. In situations where the timing and volume of receipts is uncertain,
labour for goods receipt operations will have to be allocated at short notice. This labour can come
from other parts of the warehouse operation, from temporary workers or permanent employees who
are on ‘stand-by’. The best approach depends on the availability and cost of local labour and will
also be influenced by the labour policy of the organisation.
Often there can be a great deal of uncertainty surrounding the receipt operation. The timing and
volumes of receipts are often dictated by other people and the nature of the humanitarian situation
for which the goods are required. Consequently, it may be beneficial to have a surplus of people
enabling uncertain peaks of activity to be handled. In many locations labour may be a cheap
resource enabling this to be done without too high a cost penalty.
BULK STORAGE OPERATIONS
The bulk store will normally be the major storage area in the warehouse.
Sometimes goods will go straight into the picking area but this will only be in times of shortage or
when there are special fast moving lines.
Occasionally, goods will be received that are unexpected and not actually required for beneficiaries
e.g. donations in kind. These must be stored somewhere, at least temporarily. Care must be taken
to avoid unwanted goods causing a bottleneck in the operation, if possible.
The number of different goods will determine the strategy for the size and operation of the bulk
store. There are circumstances when the bulk area will be located immediately above or adjacent to
the picking area.
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Generally, however, the bulk area will be the main area, separate from picking and the area in which
all goods received will be held for varying lengths of time.
Within the storage area there are two main considerations. Firstly, attention will need to be placed
on making the best use of space. As well as using the floor area we must also think about using the
vertical space. Secondly, thought needs to be directed to handling times and how easy it will be to
access goods. One key to providing both good use of space and quick handling times is the use of
pallets. Pallets enable several items to be moved at once and they also facilitate the stacking of
product to use the height of the warehouse. The photograph below illustrates the issues of
balancing the use of space and handling time. You will see that a high space utilisation has been
achieved at the expense of access to all pallets. In this case it is likely the product is of one sort so
that a last in, first out (LIFO) rotation policy would be acceptable. If however, a first in, first out
(FIFO) rotation is required, which is often the case when goods have a short shelf life, another form
of storage would have to be used.
Putting product away into storage is one task, but later on we must be able to find it again.
Consequently, it is helpful to identify locations or spaces in the warehouse by some form of coding
that identifies a unique position. As product is put away the location should be recorded. This
recording can be as simple as a blackboard on the warehouse wall, or in bigger warehouses it might
be held on computer in a warehouse management system.
Depending upon the characteristics of goods the warehouse may have to be separated into zones to
accommodate goods under different conditions. Goods such as medicines may have to be kept in a
temperature controlled zone or perhaps in a high security zone where they are locked away.
Once again the impact on the labour requirements will be dependent on the methods and processes
employed. The flow of materials/goods from the receipt area in terms of volumes, frequency and
content, will determine the basic requirements.
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The other main factor to consider is the average distances travelled when moving through the bulk
storage area. The larger the area, the longer it will take to move goods into and out of the area and
the more resources will be required for a given workload. Therefore, the layout of the bulk storage
area and decisions about where to put the goods in that space will have an impact on the total
resource requirement.
The tasks concerned with the bulk storage operation include the following :
Obtain instructions on where to put the goods.

Move to that location.
Place materials/goods in that location.
Record the location used.
Consolidate partly filled locations by moving cartons/bags from one location to another.
Obtain instructions for replenishing goods to the picking areas.
Replenish the picking areas.
Report/remove damaged goods.
Return to the pick up point.
Report actions.
In operations where some goods are stored and moved on pallets, the following tasks are also
normally undertaken :
Consolidate partly filled pallets by moving cartons/bags from one pallet to another and move
the empty pallet to a holding area.
Move/tidy pallets from the bulk storage area.
PICKING, KITTING AND REPACKING OPERATIONS
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In the bulk storage area of a warehouse operation, each of the items being stored is allocated a
different physical area to be stored. However, if the consignments which are despatched from the
warehouse include more than one type of item, a picking operation is required to bring these
different items together to one location from different locations around the bulk storage area. In other
words, the picking operation involves the preparation of orders by picking items from storage to
make up consignments. These consignments can then be taken to the goods despatch area.
As well as being called picking this activity is also referred to as selection, retrieval or assembly.
This operation is often labour-intensive as it involves handling individual items whereas other
activities often involve handling of bulk. As well as adding value, it is one of the highest cost
activities.
The tasks concerned with consignment picking include the following :
Collect picking documents.

Collect equipment for transporting.
Locate picking face.
Check and pick appropriate quantity.
Travel to subsequent picking faces.
Advise discrepancies/damaged goods.
Travel to sorting, consolidation, packing, despatch area.
Prepare kits and repack.
Advise replenishment requirements.
Complete and pass on documentation.
In some operations, ‘kits’ are created by picking different items from bulk storage and packing them
together. After the kits have been created, they may be returned to bulk storage for picking at a later
date or they may be moved to goods despatch for immediate onward delivery to beneficiaries.
GOODS DESPATCH
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In most circumstances Goods Receipt and Goods Despatch may utilise the same area. This
requires strict disciplines and controls. In these circumstances, receipt and despatch of product
should be carried out at different times in the working day. Once again like in goods receipt, goods
despatch provides an interface with the outside world. Control can therefore be difficult.
As with goods receipt, the calculation of space must take into account the free movement of labour
and equipment, including parking zones for equipment.
It is vital that volumes are accurately anticipated and adequate allowances are made for peaks etc.
There must be sufficient loading bays. As in the goods receipt area, it is often difficult to fully utilise
the height that is available - unlike in the main storage areas.
As with the goods receipt area, the goods despatch area is always at risk of congestion. The control
of the waiting vehicles and trailers is most important - hold ups caused for whatever reason (e.g.
shortage of the right sized trailers) can quickly lead to congestion as the picking operations will
normally have to continue if the day's work is to be completed.
The tasks to be undertaken in the despatch area include the following :
Check notes/goods picked.

Re-pack/re-palletise.
Record batch/serial numbers.
Prepare documentation.
Label consignments.
Compile load.
Confirm load/documentation.
Load vehicle in sequence.
Seal vehicle/obtain signature.
Arrange vehicle movement.
Open/close shutters or doors.
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The prime objectives of the despatch area should be to :
Ensure all consignments have been consolidated and packed correctly.

Ensure that all consignments are held in correct sequence for loading.
Ensure all consignments are available for loading into transport vehicles.
THE FUNCTIONS OF WAREHOUSE AND INVENTORY MANAGEMENT
The functions of warehouse and inventory management are different. In essence, the function of
warehouse management is concerned with all the activities that take place in the warehouse, as
described above. The function of inventory management is to manage the stock levels in the supply
chain by managing inventory supply to meet demand.
The functions of warehouse and inventory management may or may not be combined into a single
job. In many organisations, the functions of warehouse manager and inventory manager are
separate. Often warehouse management has no influence or control over the level of activity in the
warehouse. This is true of both goods receipt and goods despatch where the programme
management will often influence what is arriving and when and to where it should be sent. The
definition of the precise function will depend upon the needs and funding available for the
programme. For example, it is common for the programme management to perform the inventory
management function.
For clarity, the functions of warehouse and inventory management are described separately, as
below :
THE FUNCTION OF THE WAREHOUSE MANAGEMENT
In general, the warehouse management is responsible for the management of all the warehouse
activities described above in order to achieve the specific objectives of the organisation. In doing so,
they are also responsible for ensuring that the policies and procedures of the organisation are
adhered to.
In seeking to achieve the objectives, the warehouse management has three types of resource
available :
Space.
People.
Equipment.
These resources represent a cost to the organisation. Therefore, the warehouse management’s job
is to achieve the objectives of the organisation at the lowest possible cost.
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Warehouse management will typically have the following responsibilities :
The planning and day-to-day management of all the major warehouse activities (goods
receipt, bulk storage, picking, goods despatch).
The efficient use of space, labour and equipment.
Adherence to the organisation’s policies and procedures.
The security of the warehouse for the prevention of theft.
Protection of the goods from damage by pests and the weather.
The rotation of stock and the monitoring of stock that is at or near expiry date.
Maintenance of the building and equipment.
The health and safety of all warehouse staff.
The recording of warehouse activities and the provision of reports for the organisation and for
use in reports to donors.
THE FUNCTION OF THE INVENTORY MANAGEMENT
In essence, the inventory management’s objective is to meet the demand for humanitarian goods by
ensuring an adequate supply, i.e. balancing supply and demand.
Rate of
Supply
Rate of
Demand
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The diagram illustrates the relationship between the rate of supply, the level of inventory and the
rate of demand. The rate of demand “pulls” the products from inventory. If the rate of demand
exceeds the rate of supply the level of inventory will decline and eventually it reaches zero.
The rate of supply “pushes” product into inventory and if this exceeds the rate of demand the
inventory level will increase requiring a bigger place to store it.
In the early phases of an emergency situation, there will be a heavy emphasis on the push of
product into inventory, in anticipation of clear, defined needs and of the high demand later. The
level of this “push” activity is likely to be outside the control of the inventory or warehouse manager.
As the scale of the situation becomes clearer the “pull” activity will then start to move the product
into the places where it is required and the level of inventory will stabilise at an appropriate level.
Again the decision of when to move goods will likely rest with others.
At the beginning of an aid situation there can also be issues surrounding donations which “push”
more goods than requested, and sometimes not really needed, into the supply chain. Also issues
can occur in procurement and transport creating a different level of flow than would be ideal. For
example, head office might be short of funds so that goods cannot be procured until they become
available.
This interaction between push and pull activities will create a fluctuating level of inventory which
poses challenges for inventory management to account for it all and for warehouse management to
store it safely.
The rate of demand will depend on the characteristics of the humanitarian aid situation. Different
situations will of course have demands for different goods, but it is likely that some similarity will be
displayed by identical events.
On the other hand, the supply of goods can also vary over time. For example :
The supply of foodstuffs depends on the timing of growing seasons.

Manufacturers schedule production in batches in order to minimise production costs.
Donors make contributions only when funds are available.
Therefore, inventory management’s job is to vary the rate of supply in order to maintain a stock level
that allows the varying demand for humanitarian goods to be met.
In doing so there is a balance to be made :
If the rate of supply is too low, there is a risk that the stocks will be used up and that some
beneficiaries will not receive aid. This can result in a loss of lives and/or increased suffering.
If the rate of supply is too high, there is a risk that stock levels will rise, which could lead to
overflowing warehouses, the deterioration of product because of being kept in stock too long
and stock write-offs. It also means that the organisation has spent more money than
necessary and/or the donor’s contribution is not being utilised to the best extent i.e. a
financial cost.
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Inventory represents a significant cost in humanitarian supply chains. This cost includes the cost of
buying goods from suppliers plus the cost of storing these goods in warehouses. However, there is
also an exceptionally high cost if goods are not available for delivery to beneficiaries. Of course, this
cost is one of human suffering and possibly of lost lives, rather than a financial one. Usually this
humanitarian cost will outweigh the financial considerations.
Therefore, inventory management must minimise the human cost by optimising the level of
availability of humanitarian goods for delivery to beneficiaries and achieve this at an acceptable
supply chain cost.
In order to achieve this balance, inventory management is responsible for the following activities :
Analysing the demand for goods and forecasting the demand in the future.
Placing orders on suppliers in order to replenish stock and maintain an adequate stock level
to meet demand.
Monitoring the delivery performance of suppliers and taking action in the case of any supplier
problems.
Monitoring the levels of stock in order to decide what to order, when to order and how much.
Maintaining stock records and ensuring the accuracy of these records.
Keeping records of these activities and providing reports on inventory management
performance.
PROCEDURES AND POLICIES
To operate a warehouse with any degree of efficiency and consistency, it is necessary to define the
procedures that will be used in all activities and the policies that will govern these procedures. These
procedures and policies will normally be documented by the humanitarian organisation and it is the
responsibility of the warehouse/inventory manager to make sure that these are adhered to.
PROCEDURES
The procedures document defines how the activities in the warehouse will be carried out and can be
thought of as the ‘best practice’ of the organisation. The advantages of creating and using a
procedures document are as follows :
The effectiveness and efficiency of all warehouse operations across the organisation can be
controlled.
By reasons of standardisation, staff can be trained more quickly and efficiently.
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The performance of warehouse operations across the organisation can be compared.
The procedures can be agreed and aligned with other functions in order to optimise the
performance of the whole organisation.
The procedures provide visibility of the operations for donors.
However, in creating such procedures, care must be taken to avoid constraining the use of local
initiative which might be required to deal with local conditions. This is generally achieved by limiting
the level of detail that the procedures document defines, allowing more flexibility and/or by arranging
‘dispensations’ to allow departure from the procedures in order to optimise local performance.
The procedures will normally cover the following activities :
The method of stock checking.

How to deal with stock losses.
How receipts will be controlled.
How inspection will be undertaken.
How rejected material will be controlled.
How issues will be controlled.
How to deal with unwanted material and scrap.
Stock recording.
The document will also typically contain copies of standard documents and forms to be used in the
warehouse activities such as stock record cards and a goods receipt register.
POLICIES
Policies define the general conduct of the warehouse operation. Examples of the types of policies
that organisations will define are as follows :
Health and safety.

Human resources management.
Security.
Pest control.
Warehouse maintenance and cleaning.
Quality control.
Record keeping and reporting.
As with procedures, policies are generally documented and copies are kept at each facility for
reference.
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MODULE 2 : IDENTIFYING WAREHOUSE REQUIREMENTS
In this module, we will explore the basic requirements that govern the selection and design of the
warehouse and the design and management of the warehouse operation.
In this module we cover the following :
General requirements.
Understanding the product characteristics.
Taking account of local legislation.
Selecting a suitable location.
Leasing temporary warehouses.
GENERAL REQUIREMENTS
The design and management of a warehouse operation is driven by the purpose and need for that
operation.
Firstly, the position of the warehouse in the humanitarian supply chain will affect the requirements
for the operation. A permanent global warehouse can be set up and operated much like any
commercial operation and can take advantage of the current best practices, equipment and systems
in warehouse management.
A temporary field warehouse, however, is unlikely to be able to take advantage of the same kinds of
equipment and systems available to a central warehouse. Simplicity and flexibility combined with a
heavy dose of common sense are likely to be the main features of a successful approach to
managing such an operation.
However, there are a range of factors that must be taken into account in any kind of warehouse
operation :
The storage time requirements i.e. short term or long term.

The quantity of goods to be stored.
The characteristics of the goods to be stored.
The need for other activities e.g. packaging, labelling.
UNDERSTANDING THE PRODUCT CHARACTERISTICS

The characteristics of the products to be stored will have an impact on the selection of a new
warehouse facility and the design of the layout, the selection of any equipment and the working
methods. The key characteristics which should be considered are as follows :
24
Volumes of goods to be stored i.e. tonnes, cubic metres.
Size and weight of the goods in their packaging.
General environment.
Temperature sensitivity.
Type of packaging.
Hazardous materials.
VOLUMES
The volume of goods to be handled includes :
The frequency and size of deliveries to be received at the warehouse.

The quantity to be stored.
The frequency and size of despatches to be made from the warehouse.
These factors will impact the space required for goods receipt, bulk storage and goods despatch
activities and also the manpower requirements to operate the warehouse.
SIZE AND WEIGHT
In most cases, the space used in a warehouse is dominated by the bulk storage area, usually
around 80% of the total floor area. This is mainly determined by the size, weight and quantities of
the goods to be stored.
Of course, some products are relatively light but take up more space. Others are small but heavy.
As a guide, the table below gives the average storage volumes in cubic metres per metric tonne for
a range of goods.
Item 1 Metric Tonne

Vegetable oil in tins 1.7 cubic metres
Flour, rice, sugar 1.5 cubic metres
Grain 2 cubic metres
Blankets in pressed bales 5 cubic metres
Canned products 1.5 cubic metres
Milk powder in tins 3 cubic metres
Blankets in un-pressed bales 10 cubic metres
Tents 5 cubic metres
Clothing 10 cubic metres
Kitchen utensils 4.5 cubic metres
Medical supplies (average of miscellaneous) 4 cubic metres
Source: ICRC Logistics Field Manual.
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In calculating the volume of bulk storage area that will be required, we have to take into account the
fact that we will require access to the goods for storage and retrieval and that the storage equipment
(if used) will also take up space.
GENERAL ENVIRONMENT
It is important that the warehouse environment provides conditions that ensures there is no
deterioration in the quality of goods during their stay. Whilst temperature is an important
requirement that is dealt with below, there are other environmental considerations.
One of these relates to keeping the product dry which can pose challenges when trucks have to be
loaded outside of the warehouse building. Humidity can also cause deterioration in product.
When product is received in bags, and the temperature is high outside, the product can increase in
temperature. This is particularly true if the product is left in the sun for an extended period of time. If
the bags are then stacked in the warehouse the heat generated in the confined space can lead to
spontaneous combustion. Careful monitoring is therefore required.
Other products can produce dust which in the absence of appropriate ventilation can create an
explosive environment.
Some products can also deteriorate if they are left exposed to sunlight for too long.
Medical warehouses pose special requirements. They have to protect the items from physical
damage, moisture, excessive heat or cold, sunlight, dust, dirt and pests. The cleanliness in the
medical warehouse is of even more importance than other commodities.
All of these restrictions can be accommodated if they are planned for. However, there will be times
that the operating environment is chaotic, usually as activity levels are high, placing space and
equipment under extreme pressure. It is at these times that the condition of goods can deteriorate
quickly, often unmonitored and with the subsequent impact of severe problems further down the
supply chain.
There is one special requirement for ventilation that relates to the area used for recharging battery
powered handling equipment. During the recharging process hydrogen gas is produced which in a
confined space is highly flammable with frightening consequences! This also suggests that there
needs to be strict control over smoking policy in a warehouse.
Storage recommendations for food and non-food items are given in the table below.
26
Source: ICRC Logistics Field Manual.
27
TEMPERATURE SENSITIVITY
Some goods require temperature controlled storage in order to prolong their useful life. Indeed, most
goods are likely to be degraded or damaged by extremes of temperature. The main classifications of
temperature requirement are chilled, frozen and ambient, and many goods have specific storage
temperature ranges which are defined by the manufacturer.
Chilled and frozen goods obviously require special refrigeration equipment and should be handled
with care. Care should also be taken with the ‘ambient’ area of the warehouse to avoid temperature
extremes e.g. ensuring adequate ventilation and avoiding excessive exposure to direct sunlight.
Examples of temperature sensitive goods include many medicines and foodstuffs. These goods
must be kept within a certain temperature range from the time of manufacture to the point of
consumption. As an example, many vaccines need to be kept at a temperature between 0 and 8
degrees Celsius. If temperature limits are not respected it often means the vaccine will loose its
efficiency or that original expiry dates cannot be guaranteed. In such a warehouse there must be a
clear temperature procedure that checks temperature twice per day. The warehouse must be
equipped with a maximum/minimum thermometer.
A supply chain that deals with such temperature sensitive goods is known as a ‘cold chain’. In a cold
chain, measurements are taken and checks are made to confirm that the goods have remained
within the specified temperature range throughout the chain. Cold chain defects are the frequent
cause of problems in immunisation programmes.
From a warehouse perspective the vulnerable part of the cold chain is the unloading and loading
operations. Often these involve moving goods from one area to another which poses a challenge to
ensure product stays within its allowed temperature range.
Standard storage temperatures are normally defined as follows :
Deep freeze: below -15C

Refrigerator: +2C to +8C
Cooled: +8C to +15C
Room temperature: +15C to +25C
TYPE OF PACKAGING
Packaging types include boxed, bagged, bulk and loose. The type of packaging will impact the way
that the goods must be handled and stored. Therefore, the variety of packaging types will have an
impact on the variety of handling methods and equipment required and on the design and layout of
the bulk storage area, including the storage method (block stacked, binned, racking, etc.) and the
access space required for storage and retrieval operations. If possible, the warehouse manager
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should liaise with procurement on the specification of packaging types used in order to minimise the
impact on the warehouse operations.
This is an area that sees constant innovation in the type of materials available. In particular there
are many different ways of restraining and protecting product that is palletised. The most common
of these is using stretch wrapping or shrink wrapping. Shrink wrapping uses either heat or vacuum
technology to “shrink” a giant plastic bag to the shape of the product.
Shrink wrapping Stretch wrapping
Stretch wrapping is like the cling film that we use at home. If a pallet is wrapped around the top
layers with this it prevents movement in transit.
Other forms of restraint are adhesive tape or metal banding. Care needs to be taken in using all of
these as they can damage the goods if used inappropriately. They can also produce a hazardous
work environment if not disposed of correctly.
Not only are these packaging materials important for protecting the goods whilst in the warehouse,
but also for their onward journey to their destination. Out of sight should not mean out of mind!
Damaged in transit goods usually end up back at their source, creating even further problems for the
warehouse manager.
HAZARDOUS MATERIALS
Hazardous materials such as pesticides, compressed gases and fuels require special handling and
storage. They will normally be stored in an area separate from other materials and extra space will
often be required. Ideally they should be stored in a separate building.
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TAKING ACCOUNT OF LOCAL LEGISLATION
It is the responsibility of the warehouse manager to ensure that the operation complies with local
rules and regulations. As ignorance is no defence, the manager must proactively identify those
regulations that apply to the operation and take steps to ensure that the operation and all its
employees comply with these regulations.
The following is a list of regulations that are often encountered :
Employment regulations.
Health and safety rules.
Rules which govern the operation of forklift trucks.
Food hygiene.
Storage of dangerous materials.
Storage of drugs.
Building regulations.
Financial accounting rules.
Regulations on these and other subjects vary around the world and the warehouse manager must
not assume that rules in one location also apply in others.
SELECTING A SUITABLE LOCATION
Whether selecting a location for a temporary building or selecting from one of a number of existing
buildings, there are a range of factors to consider when deciding on the location of a new warehouse
facility :
Proximity to ports of entry and beneficiaries.

Existing buildings.
Security.
The context.
Site condition.
Access.
Services.
Temporary warehouses.
Bonded warehouses.
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PROXIMITY TO PORT(S) OF ENTRY AND BENEFICIARIES
Firstly, consider the geographical location of the port of entry to the humanitarian region compared
to the location(s) of the beneficiaries of the aid. If the beneficiaries of the aid are geographically
close to the (air) port of entry to the humanitarian area, then the warehouse location should
obviously be in the same area. However, if the beneficiaries are distant from the port of entry, we
must consider the warehouse location in order to minimise the total costs and the effectiveness of
the transportation links to and from the warehouse.
The simplest method for choosing a location from this point of view is to plot the port and beneficiary
locations on a map and to use common sense in deciding the best location.
Sometimes however a common sense or analytical approach might not produce the best option.
Frequently, major disasters can put port operations under extreme pressure with volume of activity
significantly exceeding what they were designed to handle. In such cases the obvious port of choice
could lead to a bottleneck situation and a consequent breakdown in the supply chain.
Ideally we want to choose a location that minimises the total time that the goods take from their
source to their ultimate destination. This might entail selecting a site, away from the usual
transportation routes, that results in an increase in movement time offset by quicker port clearance.
In such cases a contrarian thinking process might produce a better option.
An example of how a typical field site might look is shown below :
Beneficiaries camp
Federation staff compound

Hospital
Warehouse compound
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EXISTING BUILDINGS
Where the situation dictates that an existing building should be used for the new warehouse facility,
there are a number of factors to consider when assessing the suitability of any building.
The construction should be generally sound, waterproof and well ventilated. The inside walls should
be clean and painted, preferably white. Check for broken windows and doors and make repairs
where necessary. Look for signs of pest infestation e.g. droppings and holes in the walls or floor.
The available space should normally be on the ground floor, with doorways which provide adequate
access to the warehouse space, taking into account the method of moving the material that will be
used.
An assessment should be made of the warehouse size and shape and therefore its capacity to
accommodate the quantity of material which will be handled. Given a choice, it is usually better to
select a larger space rather than a smaller one – cramped conditions are difficult to operate in and
keep tidy and increases in stock or activity may be difficult to accommodate.
The floor area should be flat and made of a stable material, ideally concrete. The floor must be
capable of supporting the weight of the material to be stored and, if applicable, the weight of any
vehicles that will enter the building. Floor capacity will normally be expressed in kilograms per
square meter (Kg/sq m). A typical ground floor building will have a floor capacity of 1000 – 3000
Kg/sq m but floors with basements or sanitary installations underneath will generally have a lower
capacity.
If food is to be stored it may be necessary to have the building disinfected or fumigated by a

professional cleaning company.
Check the ownership of the building and assess the sensitivity of this, considering all the parties
involved in the humanitarian situation. This is especially important in a conflict situation where the
organisation’s neutrality may be compromised.
SECURITY
Security is a very important aspect of a warehouse facility. The security perimeter of the building and
compound should provide adequate protection for the warehouse contents, vehicles and equipment,
used at the facility.
Consider the suitability of the location to be guarded and/or protected by physical barriers such as
walls or fences.
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In addition to physical security we must also consider measures to protect the building in the event
of accidents, such as fire. The warehouse must be equipped with fire extinguishers, sand buckets
and other appropriate equipment. It is important to refer to local legislation. The local fire brigade
are usually a source of good advice. Further people must be trained how to use such equipment.
THE CONTEXT
There may be political, cultural or security considerations to take into account when selecting a
location. For example, if a low profile operation is required in the context of the humanitarian
situation then a highly visible warehouse building is likely to cause problems. Difficult security
situations may require a concentration of humanitarian operations and restrict the choice of location.
Therefore, it is important to gain a good understanding of the context before making a decision on
the warehouse location.
SITE CONDITION
It is also important to consider the condition of the site during the whole of the year. In particular this
relates to access into and around the site. For example, a site might look fine in the dry season, but
during the wet season it could become flooded or impossible to move vehicles around.
In the photograph below whilst it may be possible to conduct operations on this surface in the dry
season, it will be much more difficult when it is wet.
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ACCESS
Consider the access to the site and make sure that suitable vehicles can reach the site easily and
safely. Also ensure that there are adequate links to the local transport infrastructure i.e. roads, ports,
airports.
SERVICES
Also consider the access to services such as water, electricity and telephone links.
This is a general list of factors to consider. In any particular humanitarian situation, it is likely that
some of these factors will be more important than others. In making any decision on the warehouse
location, decide which factors are most important and then select the location that best meets the
requirements of the particular situation.
TEMPORARY WAREHOUSES
Emergency or short-term needs can be met using a range of temporary storage locations e.g :
Bulk storage containers.

Railway wagons.
Barges.
Ships’ holds.
Tent or tarpaulins.
However, many of these types of accommodation are likely to be located at transport hubs such as
ports or railway heads. Therefore, they are often expensive to use and therefore should be used for
as short a time as possible.
Special precautions against solar heating must be taken with closed containers such as railway
wagons. Ensure that there is adequate shading from direct sunlight.
Check barges and ships’ holds to see that bilge water is kept at a low level and check that hatch
covers are waterproof.
Tents should only be erected on a raised, prepared surface, ideally a concrete slab or a layer of
gravel surrounded by ditches for water drainage. Place goods on pallets or ground sheets and cover
with plastics sheets for added protection.
So although these types of temporary locations can meet short-term needs, there are significant
problems associated with them and it is usually better to seek a suitable building, if possible.
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The photograph below shows a temporary warehouse in the initial stages of construction :
BONDED WAREHOUSES
Bonded warehouses can be used for temporary storage where goods enter a country but are due to
be re-exported to another country, thus avoiding the payment of import duty.
The permission to use a bonded warehouse is normally in the gift of the local government and there
are strict controls on the goods.
Therefore, the organisation must have a good relationship with the local government and the
warehouse operation must be carefully managed and controlled.
A bonded warehouse can be an expensive operation but this cost can be traded off against the
import duty that would otherwise be paid.
LEASING TEMPORARY WAREHOUSES
In emergency situations where a temporary warehouse is required, these are normally leased, not
purchased.
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In this situation, there is often a shortage of suitable buildings or locations for warehouse space and
this can often cause the costs to increase significantly. Therefore, it is often necessary to utilise
temporary warehouse space for as short a time a possible.
Nevertheless, care must be taken with the drawing up of the lease agreement with the owner. The
following items must normally be included and checked in such a lease agreement :
The price for the lease.

The period of the lease agreement.
The period of notice required for terminating or extending the lease period.
Confirmation of the existence of property insurance, covering third-party, fire, water damage,
window breakage etc.
Details of any security arrangements.
A detailed inventory of any equipment, fixtures and fitting included with the building and a
detailed description of their condition.
Confirmation of either sole tenancy or details of other tenants.
Information about the ground or floor strength per square metre.
The weight capacity of any equipment such as fork lifts, racks and shelves.
Finally, in situations where neutrality is important, care must be taken to establish the actual owner
of the building, which might be different from the ‘leaser’ of the building e.g. the military, religious
groups or government.
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MODULE 3 : SELECTING EQUIPMENT AND WORKING
METHODS
So far in this unit we have explored what a warehouse is and why we need one. We have also
considered some general requirements for the design and the characteristics of the goods that we
store within them.
This module begins to consider the design of the warehouse in more detail. It covers the following
topics :
Planning work phases.

Selecting handling equipment.
Selecting storage equipment.
Defining work methods.
PLANNING WORK PHASES
In the first module we considered the key work phases in a warehouse. These were :
Goods receipt.
Put away (placing goods in the bulk storage area).
Picking of goods from the bulk storage area.
Goods despatch.
Planning these work phases involves deciding on the timing and sequences of these activities,
which must be done taking into account the constraints and limitations.
GOODS RECEIPT
The timing of arrival of goods depends on the scheduling of the inbound transport operation. This
inbound transport is sometimes referred to as primary transport. Often the warehouse is the staging
post between primary and secondary transport. Primary refers to movement, usually in bulk,
between one or a few supply points to one destination. Secondary transport then connects the
warehouse to the next stage in the supply chain and a typical feature of this is the delivery of smaller
quantities to several locations.
Ideally, this schedule would be known in advance which allows the resources and equipment
necessary for goods receipt activity to be planned and made available. However, we have
described situations in the first two modules that can lead to uncertainty in this information.
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PUT AWAY
Once the goods have been unloaded, checked and prepared for storage they must be moved into
the storage area. They will then stay in storage until they are required for despatch.
This activity must be done in a timely manner to ensure the goods receipt area is cleared quickly,
thus preventing bottlenecks, and so that the goods are placed into a more secure location. Once the
product is in the storage area it is likely that the environmental conditions will be more appropriate
for its safe keeping.
When they have been put away, their location must be recorded so that they can be found again.
PICKING
The picking activity must be timed in such a way that consignments are available in time for the
goods despatch activity. Any delay in picking will have an impact on the transport of goods to the
beneficiaries. Also, if picking takes place at the same time as put away, there is a risk of congestion
in the bulk storage area which may slow down operations and increase health and safety risks.
Finally, this activity must be planned in such a way that avoids a build up of goods in the goods
despatch area which may cause congestion.
GOODS DESPATCH
The timing of goods despatch operations must be linked to the secondary transport schedule. As
stated above there is also a dependency on the timing of the picking activities. Finally, if goods
despatch and goods receipt overlap, there is a risk of congestion in the vehicle docking/parking area
and goods receipt/despatch area, depending on the layout of the warehouse facility.
The objectives of planning the work phases are :
Minimise the total people resources required.

Minimise the total handling equipment and time required.
Optimise the use of space in the warehouse.
Minimise unnecessary handling of goods.
Minimise congestion and health and safety risks.
An example of a goods despatch operation is shown below :
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SELECTING HANDLING EQUIPMENT
Any equipment selection for warehouse operations must achieve a balance between the operational
efficiency and the cost of the equipment. At the same time there is a need to meet the overall
requirements of the operation within the constraints imposed by warehouse size, warehouse layout,
products and processes.
However, in some circumstances, the use of handling equipment may be traded off with the use of
manual labour. Many humanitarian organisations prefer to make use of local labour rather than use
handling equipment in order to provide some employment and as part of managing relations with
local people. Also, in many parts of the world, local labour is inexpensive compared to the cost of
handling equipment.
The other benefit from using labour is that it tends to be more flexible and does not require
specialised maintenance. If an operation becomes dependant on mechanical handling equipment it
must ensure suitable reliable maintenance facilities can be provided.
In considering handling equipment, the decision process revolves around the key principles of
materials handling :
Simple equipment tends to be more reliable and is easier to maintain.

Moving larger loads tends to be cheaper and faster.
Standardisation (using a small number of different types across the organisation) reduces the
costs of training and maintenance.
Mechanisation improves efficiency, but at the expense of flexibility.
Gravity is cheap.
39
In the selection of handling equipment, the objectives will be to :
Reduce unit material handling costs.

Reduce handling time.
Reduce overheads.
Conserve/utilise floor space.
Ensure workers’ safety.
The range of materials handling equipment has developed significantly over the past few years. It is
now possible to obtain a piece of equipment to meet almost any requirement.
It must be recognised, of course, that with advances in technology, the sophistication in equipment
tends to increase the cost.
The selection process must be one which recognises the requirements to do the current job,
together with a longer-term view that it will meet future requirements.
Handling equipment may be classified under the following headings :
Horizontal movement.
Storage and retrieval.
Order picking.
The main equipment options in each classification are described below :
HORIZONTAL MOVEMENT
The selection of horizontal movement equipment depends on the volumes and the variety of lines to
be handled. As volumes and the complexity of the operation increases, the type and sophistication
of equipment will increase accordingly.
SACK TRUCK
The simplest and cheapest of handling equipment, these may be used to move loads of up to 100kg
on smooth and level surfaces.
40
HAND PALLET TRUCKS (HPT'S)
These may be used to move loads of up to 2000 kilos over short distances on smooth, level floors.
When goods are delivered palletised in containers and there is no loading dock available, a HPT is
the only way to move the pallets inside the container.
MOTORISED HAND PALLET TRUCKS
If the volume of goods to be moved is large and/or the area of operation is large, a motorised hand
pallet truck could be considered. Retraining is minimal - hand pump for lift and a motor in the wheel
provides traction. Manoeuvrability is easier and the truck can cope with gradients.
41
POWERED TRUCKS
These will cope with a higher rate of movement, longer distances, and inclines.
The choice of style, capacity and fitments for powered trucks depends on goods moved, terrain
covered and number of movements to be made in a working day. There is a range of standard
equipment and workshop modifications to cover virtually any situation.
WALK-WITH TRUCKS / STAND-ON TRUCKS
Both offer considerable manoeuvrability and can work in small spaces with unrivalled stability. This
is a long-term consideration if growth is likely to involve an increase of fixed equipment: more
racking, more machines, or frequent loading and unloading of vehicles. Both trucks only require the
simplest upgrading of skills for operators.
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RIDER SEATED TRUCKS
These offer the greatest value where speed, long distances and continuous movements are
required. Training is necessary and represents a re-grading of operators. Careful supervision must
be maintained when driving amongst pedestrian workers. Both these and stand-on trucks may be
used as tow trucks.
STORAGE AND RETRIEVAL
COUNTERBALANCE TRUCKS (CBT)
In a warehouse facility, storage capacity is improved by making use of headroom by stacking one
pallet on top of another. Generally, the equipment used is that 'maid of all work' the counterbalance
forklift truck. Such a truck will carry palletised goods to and from racks 5-6 metres high but will
require aisles of 3 or more metres in width. For outside storage and movement this type of truck is
unequalled and its capacity range can extend to large lifts such as containers. For use on rough
terrain, 4-wheel drive versions are available.
43
Storage capacity may be increased by making better use of the floor space available; by reducing
the aisle widths. The normal width of a ‘Narrow Aisle’ is approximately 2 metres and adds
approximately 33% to storage capacity. This may be achieved in two ways :
Support arm stackers.

Reach trucks.
Support Arm Stackers
Support Arm Stackers can be ‘walk with’, where manoeuvrability is critical or there is an incidence of
other pedestrian traffic or ‘ride on’ where speed and distance are the criteria. A further option is to
decide how the operator will ride - standing or seated. If the operator needs to get on and off his
machine frequently, the ‘stand on’ machine is generally preferred. This truck is also rather more
manoeuvrable. However, if the travel distances are lengthy and the work flow is steady, the ‘sit-on’
version is less tiring, though some upgrading of skills is required as against ‘walk with’ machines.
44
Reach Trucks
This option has an additional advantage in that reach trucks can lift heavier loads higher than
support arm stackers can, thereby providing extra flexibility in terms of the unit loads that may be
handled.
Reach trucks have the advantage over counterbalance trucks in that they have a smaller turning
circle. This allows the use of narrower aisles and thus increases available storage capacity.
It is possible to increase storage capacity further by adopting an ultra narrow aisle configuration.
Width is reduced to just over one metre and the racking height may be raised to some 10 metres, to
suit the capabilities of the equipment used. The basic choice is between Free Path trucks, giving an
additional 50% space availability over the Reach Truck option, and Fixed Path cranes which offer
even more storage capacity.
SELECTING STORAGE EQUIPMENT
The factors to consider when selecting storage equipment are similar to those which are relevant
when selecting handling equipment. They primarily consist of a series of decisions that “trade-off”
the use of storage space against the handling time. Recall that maximising the use of space and
minimising handling time were two of our planning objectives. These two objectives work against
each other. As we improve the use of space it will tend to increase handling time. Conversely, as
we decrease handling time, the use of space will deteriorate. As a consequence these decisions
have to be carefully considered. Typical examples of factors to consider are :
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The extent to which the product may be stacked.
The size of the warehouse.
The height of the warehouse and the possibility to make use of the space up to the ceiling.
Nature/fragility of the product.
Potential problems of stock rotation.
Speed of picking and movement.
The range of products.
The time span over which the warehouse is expected to operate i.e. permanent or temporary.
Storage equipment options and the types of equipment in each are covered below.
LOOSE STORAGE
Goods are stored in silos or in piles on a floor or yard.
BINNED STORAGE
In binned storage a cell in a racking or shelving system is allocated to a particular product. A

considerable variety of designs of either plastic and steel hook-on, or freestanding containers are
available.
The containers vary in sizes, colour and shape, and most have semi-open fronts. The use of such
equipment makes it possible to present a large variety of small components on a very compact face.
SHELVED STORAGE
Shelving is normally used to give a very flexible system for small items. There are many different
types of shelving, most of which is adjustable with different spaces. Shelved storage will sometimes
be used with small tote pans for small manageable units.
BLOCK STACKING
This is the commonest method of storing large quantities of products. The goods are packed in unit
loads, and stacked to their maximum safe height, which depends on the weight and stability of the
unit packages.
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Examples of block stacking.
ADJUSTABLE PALLET RACKING
The ability of the forklift truck to lift heavy loads to heights in excess of 6m necessitated the
development of racking which could not only carry the imposed loading, but also withstand
accidental misuse by the forklift truck. Adjustable beam racking has three main components, slotted
uprights formed into frames, beams with connectors which allows quick fitment to frames, and base
plates for floor fixing and load spreading.
47
DEFINING WORK METHODS
The work methods used in a warehouse depend on the phase of activity they relate to. You will
recall we have four phases which are :
Goods receipt.
Storage.
Picking.
Goods despatch.
GOODS RECEIPT OPERATIONS
If the warehouse manager has some control and visibility of the goods delivery schedule, the goods
receipt operations can be planned and managed to ensure a smooth flow of goods into the
warehouse. However, in many situations, the warehouse manager has very limited control and
visibility of goods deliveries. Therefore, goods receipt operations must be flexible and adaptable.
The prime objectives of the receiving area should be to :
Receive materials/goods from internal/external suppliers, unload the vehicle as quickly and
efficiently as possible and make available for storage.
Check that the quantity, type and condition of the materials/goods are as specified in the
order.
Make provision for any quality control activity required.
The factors which will influence the level of labour requirements are :
The frequency and size of deliveries.

The methods used to receive the goods and make them available for storage.
The total volume of deliveries is related to the demand which is being met for humanitarian goods by
the organisation. The timing of deliveries depends on the transportation scheduling. Both these
factors should be taken into account when planning the goods receipt operations.
The goods receipt work methods depend on the following factors :
MATERIALS/GOODS RECEIVED IN LOOSE FORM

Manual unloading by individuals or groups is affected by weight and size constraints and any
requirement for onward movement to storage locations e.g. palletising within the warehouse. If
palletising is required and undertaken within or at the rear of a vehicle, equipment required for
movement between the vehicle and in the receipt area, will be required.
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MATERIALS/GOODS RECEIVED IN PALLETISED FORM
If goods are already received stacked on pallets, or in units suitable for mechanical handling, side or
tail loading must be considered.
USE OF AN UNLOADING DOCK
A variety of unloading docks are available as an alternative to unloading at floor level. These will be
part of the assessment of equipment required to support the warehouse operation.
The final component is the range of tasks to be carried out covering both the physical and
administrative activity.
A typical list of such tasks is as follows :

Booking in of vehicle and park/unload instruction.
Calling in vehicle for unloading.
Document checking.
Un-sheeting/unsealing vehicle.
Contents check.
Offloading.
Break down pallets containing mixed goods into separate items.
Goods/material check for quantity/type/damage.
Quality control.
Sign documents for receipt.
Load goods onto pallets.
Label materials/goods/pallets.
Enter stock/advise receipt.
Select those tasks that are relevant to the operation being planned.
BULK STORAGE OPERATIONS
The bulk store will normally be the major storage area in the warehouse. Sometimes goods will go
straight into the picking area but this will only be in times of shortage or when there are special fast
moving lines.
The number of lines will determine strategy for the size and operation of the bulk store. There are
circumstances when the bulk area will be located immediately above or adjacent to the picking area.
Generally, however, the bulk area will be the main area, separate from picking and the area in which
all goods received will be held for varying lengths of time.
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Once again, the labour requirements will be dependent on the methods and processes employed.
The flow of materials/goods from the receipt area in terms of volumes, frequency and content, will
determine the basic requirements together with the handling factor in terms of manual or mechanical
movement.
The other main factor to consider is the average distances travelled when moving through the bulk
storage area. The larger the area, the longer it will take to move goods into and out of the area and
the more resources will be required for a given workload. Therefore, the layout of the bulk storage
area and decisions about where to put the goods in that space will have an impact on the total
resource requirement.
The tasks concerned with the activity include :
Obtain location instructions.

Move to location.
Record locations used.
Place materials/goods in location.
Consolidate part pallets.
Move/tidy pallets.
Obtain replenishment instructions.
Replenish picking area.
Report/remove damaged goods.
Return to pick up point.
Report actions.
PICKING OPERATIONS
Picking involves the selection of products from the bulk storage area to form consignments for
transport to the next stage in the supply chain and, ultimately, to the beneficiaries.
The tasks concerned with order picking include :
Collecting picking documents which define the products and quantities to be picked.
Collect any required handling equipment.
Locate the first picking location.
Check and pick appropriate quantity.
Travel to subsequent picking locations, etc.
Advise discrepancies/damaged goods.
Travel to sorting, consolidation, packing, despatch area.
Advise replenishment requirements.
Complete and pass on documentation.
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In planning picking operations there are three things to consider :
Picking method.
Picking technique.
Picking path.
PICKING METHODS
There are three general categories of picking method :
1. Low level picking.

2. High level picking.
3. Station picking.
Low Level Picking
The picker operates from floor level with the goods to be picked easily available. This will be either
at ground and/or first storage level.
The picker is often supported by some form of manual or mechanically operated vehicle e.g. pallet
truck, roll cage etc. in order to pick on a continuous basis.
High Level Picking
The picker operates with different equipment to higher levels within the storage area. This can be
carried out both in the bulk storage area or in an independent picking area. In the former case a
balance of work between the activities and replenishment needs to be carefully planned to avoid
congestion and ensure a safe operation.
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Station Picking
The picker remains at the same place and picks from unit loads, which are transported to him.
The transportation can be in the form of movable storage racks, conveyors or pallets/unit loads
placed adjacent to the picker.
PICKING TECHNIQUES
There are three common techniques for picking goods against either a single or multiple picking
lists :
1. Consignment picking
2. Line picking
3. Zone picking
Consignment Picking
The picker picks a consignment, which is usually placed directly into a transporter.
This ensures the minimum of sorting and picking time and cost.
In some cases the picking of multiple consignments into separate transporters is undertaken
particularly where common items appear on the orders.
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Line Picking
Orders are batched together and the picking is undertaken product line by product line.
This generally achieves a saving in travel time for the picker but creates a requirement for a
subsequent sorting operation to complete the process.
Zone Picking
The bulk storage area is divided into zones and pickers work separately in these zones. The greater
the number of zones there are, the greater the degree of sortation and consolidation of
consignments at a subsequent stage in the process.
PICKING PATH
There is a need to determine the type of picking path to follow.
The objective in planning the picking path is to minimise the travel distance for the picker. In order to
achieve this, the order of the items on the picking list should follow the sequence of storage
locations in the storage area. This will help ensure that the performance of the picker is controlled
and optimised.
Therefore, the labour requirement for picking of goods will depend on the following factors :
The positioning of picking locations.

The flow and pattern of work to meet despatch schedules.
The use of any handling equipment.
The distances travelled to retrieve materials/goods from picking locations.
GOODS DESPATCH OPERATIONS
As with the goods received area, the goods despatch area is always at risk of congestion. The
control of the waiting vehicles and trailers is most important - hold ups caused for whatever reason
(e.g. shortage of the right sized trailers) can quickly lead to congestion as the picking operations will
normally have to continue if the day's work is to be completed.
The prime objectives of the despatch area should be to :
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Ensure all consignments have been consolidated and packed correctly.
Ensure that all consignments are held in correct sequence for loading.
Ensure all consignments are available for loading into transport vehicles.
The labour requirements to meet the above will be influenced by :
The volume and rate of consignment despatch requirements.

The timing and frequency of despatch vehicles.
The type and method of loading and related equipment.
The nature of the operation, whether manual or mechanical, will have a significant impact on the
operational requirements.
The tasks to be undertaken in the despatch area include :
Check notes/goods picked.

Re-pack/re-palletise.
Record batch/serial numbers.
Prepare documentation.
Label consignments.
Compile load.
Confirm load/documentation.
Load vehicle in sequence.
Seal vehicle/obtain signature.
Arrange vehicle movement.
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MODULE 4 : PLANNING SPACE AND LAYOUT
The main spaces that should be planned are the bulk storage area and the areas for goods receipt,
consignment picking and goods despatch. It is also possible that space should be put aside for the
following activities :
Equipment maintenance and parking.

Charging of equipment batteries such as pallet trucks.
Refuelling of trucks.
An area for garbage disposal e.g. empty packaging.
A quarantine area for keeping rejected goods, goods to be sent back or destroyed.
An employee rest area.
Washroom.
An administration office.
It is worth keeping these requirements in mind during the planning of the main operating areas.
Planning consideration needs to be given to the following :
Sizing the bulk storage area.

Sizing the goods receipt area.
Sizing the goods despatch area.
Sizing the picking area.
Flow and layout of the goods.
Goods location in the storage area.
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SIZING THE BULK STORAGE AREA
AISLE
AISLE
GANGWAY
GANGWAY
AISLE
Plan View of a Bulk Storage Area.
In the bulk storage area, there are three major factors to take into account :
The space occupied by the goods and the equipment on which they are stored.
The aisles between the goods, for direct access to the goods.
The gangways, at right angles to the aisles.
Where goods are not palletised, the space taken up by the goods and any storage equipment will be
determined by the characteristics of the product and the volume to be stored.
Where goods are palletised, the dimensions of the pallet will be the base factor, when goods are
stored within the perimeter of the pallet. If the goods overlap the pallet, the dimensions will apply to
the area occupied by the goods.
The width of the aisle will depend upon the equipment used in the bulk storage area and the method
of operation which is used.
Gangways take up potential storage space but they allow access from one aisle to the next in order
to make it easier/quicker to move around the bulk storage area. The distance between gangways
may also be dictated by fire safety regulations because they may be needed as a way of escaping
the building in an emergency.
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THE STORAGE MODULE CONCEPT
The ‘storage module’ is a useful concept for determining the size of the bulk storage area, for a
given storage requirement. The principle is to calculate the dimensions of an area which contains 2
storage locations plus enough space between them for access to store/retrieve the goods, plus
space around the outside of the module for clearance.
To illustrate the concept, let’s consider an example situation. We have been asked to determine the
amount of space that will be required to store a consignment of kitchen sets. The kitchen sets will
be received in boxes. The intention is to store these boxes in a block stack, so that there is access
to each stack. The diagram below shows how part of the bulk storage area might look. A single
module is indicated.
Module
WALL
WALL
AISLE
AISLE
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X
Side Clearance
Aisle
Width
Block Depth
Block Width
BLOCK STACK
Y
AISLE
Rear
Storage Module
The diagram above shows a single module and the key dimensions.
The dimensions of the storage module are calculated as follows :
X = (2 x Block Depth) + Aisle Width + (2 x Rear Clearance)
Y = Block Width + (2 x Side Clearance)
Example 1
Q. Suppose that the dimensions of the block stacks are 5m x 5m, the aisle width is 2m and the
clearances are 0.1m.
What space would be required to house 10 stacks of kitchen sets?
A. First, calculate the dimensions of the storage module.

X = (2 x 5) + 2 + (2 x 0.1) = 12.2m
Y = 5 + (2 x 0.1) = 5.2m
The total floor area to house 10 stacks would be calculated as follows:
Each storage module contains 2 stacks. Therefore, we need space for 5 modules.
Floor Area = 5 x 12.2 x 5.2
= 317.2 sq metres
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Example 2
Q. Using the same storage module dimensions and supposing that we have a bulk storage area
of 25 metres by 25 metres, what is the capacity of the storage area?
A. First, decide how to place the storage modules in the space available.
In this space, we can fit 2 columns of storage modules across the 25 metre width. (2 x 12.2 =
24.4m)
The 25 metre length will allow 4 rows of storage modules. (4 x 5.2 = 20.8m)
Therefore :
Capacity = 2 x 4 modules
= 8 modules
= 16 block stacks
Note : The storage module concept can be used for other forms of storage in exactly the same way
e.g. pallets or shelving.
In situations where you are required to store different goods, on pallets or in stacks, that are different
sizes this space planning becomes more complicated. Try and combine goods into size categories.
Each size category could be placed into a zone of the warehouse and the space calculations
performed for each zone.
As an example, suppose we have been asked to store not only kitchen sets, but also bags of wheat
flour, cans of cooking oil and blankets. When we consider the sizes of the four products we decide
that the cooking oil will be stored in stacks of similar size to the kitchen sets. We decide to store
both of these in zone A of the warehouse and calculate the space requirements accordingly.
Further we decide that the bags of flour and the blankets will be palletised upon receipt. The pallets
we will use are the same of size for both products. These will be stored in zone B and we perform
the necessary calculations to determine the space.
Of course having to plan our warehouse like this may mean we loose some flexibility. Ideally we
want every product stored on pallets or stacks of the same size so that we can locate anything
anywhere.
Sometimes, even if it takes more space, it is also a good solution to store products close to each
other that will likely be despatched at the same time (for example food together). Further when you
are storing products, such as food, it helps to have them in one area so that infestation from pests
can be controlled.
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CALCULATING AISLE WIDTH
The appropriate aisle width depends on whether the goods will be handled manually or using
handling equipment.
If handling equipment will be used, the turning circle of the equipment being used to access the
goods must be taken into account. The turning circle or aisle width can normally be obtained from
the equipment manufacturer. Since this quoted width will often be the minimum, it is often wise to
increase it by 150mm so as to aid speed of manoeuvring. When calculating aisle widths,
manufacturers assume that pallets will be located as far back as possible on the forks and also that
pallets will be placed in storage locations accurately. Further they assume that goods will be placed
on the pallet without any overhang.
In a situation that you don’t have access to the manufacturer’s recommendation for the aisle width
you can estimate it as follows. Place a pallet that you wish to move/store on the forks of the fork lift
truck. If it is a four way entry pallet ensure you turn the pallet in the direction you will be handling it.
Then park the fork lift so that it is at a right angle to a wall with the pallet front just touching the wall.
Reverse the truck using maximum steering lock, so that the pallet does not hit the wall. Reverse it
until the truck is parallel to the wall. The minimum aisle width can then be determined by measuring
the distance from the wall to the farthest side of the truck. The diagram below illustrates the
process.
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Note that this will give you a minimum width and that it would be best to add 150 mm as explained
above for practical use. If you want room for trucks to pass each other in the aisle then it will need to
be wider.
It is worth emphasising that the aisle width will be unique to a particular fork lift truck and the pallet
being handled.
If goods are stored on pallets, the main factors to take into account are the size of the pallet being
handled and where four way entry pallets are being used, the aisle width will depend on whether the
pallets are being handled on the long side or the short side (pallets are rectangular in shape). If the
pallets are being handled on the short side, more space will be needed to withdraw the pallet from
the storage space before turning the handling equipment.
Where two-way traffic is in operation in the aisle, it may be necessary to increase the aisle width to
allow passing to take place.
For shelved products, the approach for designing the layout and size of the storage area is very
similar. Again, the storage module technique is utilised. The width of the aisle will depend on what
activity is to be performed, whether passing will be necessary and on the type of equipment. Usually,
replenishment of shelf space will be by hand and therefore the turning circle of any equipment being
used will not affect aisle width.
GANGWAYS
Gangways are used to gain access to aisles. They are basically dead space and should be kept to a
minimum. The number of gangways is frequently determined by the requirements of the fire officer
to provide fire escape routes. It is desirable that the racks should not exceed 30 metre lengths as
truck driver effectiveness decreases, caused by such things as difficulty in locating pallet positions
and greater distance penalties for choosing the wrong aisle.
SIZING THE GOODS RECEIPT AREA
There are no specific formulae that can be applied to planning this area.
Type and size of vehicles to be handled will determine whether loading docks will be required and
this will have an impact on the size of the receiving area.
Space requirements for marshalling, checking, sorting and quality control need to be calculated with
reference to the planned number of loads to be handled in any day.
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If the goods require quality inspection or testing then space may be required for this activity, not
forgetting that the goods being inspected must be stored pending the results of the quality checks
before release into bulk storage.
Product characteristics, unit load characteristics and speed of throughput will determine the type of
equipment needed to handle the goods. Adequate space needs to be provided to allow this
equipment to operate correctly.
The policies established for the arrival times of vehicles will be a factor in determining the number of
unloading bays required.
The size of the goods receipt area will also be influenced by the associated working methods. If
goods are unloaded and moved straight to storage, a much smaller area will be required than if
goods are held in the goods receipt area prior to movement to storage.
In some situations, it is possible to lay out the warehouse to use the same space for both unloading
and loading.
The advantage of this type of layout is greater flexibility in the use of people and equipment and a
reduction in the total space required in the warehouse. The disadvantage is the increased risk of
congestion if loading and unloading activities have to take place at the same time.
SIZING THE GOODS DESPATCH AREA
There are no specific formulae that can be applied to planning this area.
Type and size of vehicle to be loaded will determine whether docks will be required and this will
impact on the size of the despatch area.
Space requirements for marshalling and checking need to be calculated with reference to the
planned number of loads to be handled in any day.
Product characteristics and unit load characteristics will determine the type of equipment needed to
handle the goods. Adequate space needs to be provided to allow this equipment to operate
correctly.
The policies established for the departure times of vehicles will be a factor in determining the
number of unloading bays required.
The size of the despatch area will also be influenced by the associated working methods. If goods
are picked and moved straight to the vehicle, a much smaller area will be required than if goods are
held in a pre-marshalling area prior to loading.
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The "U-flow" layout (see ‘Warehouse Flow and Layout’, below) allows bays to be used both for
unloading and loading, introducing greater flexibility and potentially reducing the combined total
area.
SIZING THE PICKING AREA
Where the picking area is contained in the bulk storage area, but still needs to be segregated, the
number of picking slots required will be incorporated into the storage requirement calculation.
Where a separate picking area is envisaged, the number of items to be picked will determine the
size of the pick-face.
In a palletised environment, the layout of the picking area can be sized using the storage module
technique. The picking method to be used must be considered, i.e. high level, low level etc. Also, the
chosen picking path will influence the aisle width that will be needed.
If assembly of goods picked using line or zone picking methods is required, this will require a
suitable area to be provided.
If a kitting operation is required, extra space should be planned for this activity.
WAREHOUSE FLOW AND LAYOUT
Having estimated the space required for the bulk storage and other activities, the next step is to
determine the best way to use the space. The main issues to consider are :
The layout of the space for all the activities.

The physical location of the products in the bulk storage area.
How the products will flow into and out of the warehouse facility.
The objective of defining the flow and layout in the warehouse facility is to optimise the efficiency of
the flow of goods through the different operations.
The stages in the movement are :
The receipt of goods and sortation.

Storage of goods in the bulk storage area.
Movement of the goods from the bulk area to the picking area.
Selection and reassembly of the goods into loads.
Despatch of goods.
Wherever possible the objective should be to achieve a smooth and continuous movement through
the process and to minimise the travel distance from one stage to the next.
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The level to which this can be achieved will be directly related to the design, size and shape of the
warehouse.
The two preferred options which best meet the requirements of the objectives stated above are
‘Through-flow’ and ‘U-flow’.
THROUGH-FLOW
Through-flow will be used when the receiving and despatch areas are at opposite ends of the
building. It will tend to be used under the following conditions :
Vehicles and equipment used in receipt and despatch are of different types.
The flow of vehicles around the site will be facilitated.
U-FLOW
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U-flow will be used when the receiving and loading areas are next to each other on the same side of
the building. It provides the following features :
Because the receipt and despatch areas are side by side, the space can be used flexibly,
particularly if these activities are scheduled to take place at different times in the working day.
This can save space, overall.
Similarly, personnel and equipment can be used in a flexible way, reducing the requirement
for resources overall.
Because the main access to the building is in one place, access and security are easier to
manage.
The building may be extended on three sides where this is required and where the site
allows.
GOODS LOCATION IN THE BULK STORAGE AREA
It is necessary to consider the location of stock within the storage areas.
Most warehouse operations receive goods in bulk quantity loads and despatch goods in lesser
loads. The general practice is to locate products with a high rate of movement closest to the picking
area and products with a low rate of movement in the more remote areas.
The main considerations in determining the location are:
To minimise labour and equipment travel time.
To concentrate manpower in the most important area of operation so that optimum utilisation
of labour and effective supervision can be achieved.
The most important factor in making this decision is to establish product popularity.
The purpose/objective is simply to place more popular items in the warehouse, closest to the area
where there is the highest level of activity.
Product ‘popularity’ is a combination of the total demand for the product and the number of times
that the product is ordered.
For example, consider two products, tents and hygiene kits. Let’s assume that the demand for both
tents and hygiene kits is the same, say 1000 units per year. However, tents are requested (and
therefore picked) 10 times a year and hygiene kits are requested 1000 times a year. Therefore,
hygiene kits are more ‘popular’ than tents because they require more work to process the larger
number of requests to meet the same level of demand.
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The method used to establish product popularity is a form of ABC analysis. In this analysis, we are
interested in working out which products are picked most frequently at the highest volume.
An example of this type of analysis is given below :
Demand per No. of

Weighted Weighted
Product year (in units x orders per
Volume Percentage
1000) year
Rice (bags) 200 5,000 1,000,000 40%

Kidney beans (bags) 50 10,000 500,000 20%
Veg. Oil (tins) 200 2,000 400,000 16%
Family tent 1,500 50 75,000 3%
Medical kit 10 1,000 10,000 0.4%
Others 500,000 20.6%
TOTAL 2,485,000 100%
In establishing the warehouse demand it is important to ensure that where appropriate the demand
as used by inventory management is converted to the unit load which is picked by the warehouse
staffs e.g. demand may be expressed as tins: warehouse demand may be expressed as cases with
12 tins per case.
ZONING OF GOODS
Having established the product popularity, the final stage is to deal with the other factors which may
affect the product location decision, which are :
Order characteristics.
Product characteristics.
ORDER CHARACTERISTICS
Order characteristics relates to :
The number of line items in consignments.

The total number of pieces in consignments.
The mix of products in consignments in terms of the line items and quantity.
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The first two of these will enable us to consider either splitting consignments for picking in different
areas of the warehouse or to batch consignments together for picking. In both cases some degree of
sorting and/or consolidation activity may be necessary. For example, if most consignments are for
either food items only or medical supplies only, it might make sense to place all food items together
and all medical supplies together in the bulk storage area.
PRODUCT CHARACTERISTICS
Product characteristics relates to the products in terms of product types, size and storage and
handling requirements. For example, heavy items such as tinned food on pallets and clothing in
loose bales, require different storage and handling equipment.
This form of zoning of products provides some of the following advantages:
Less walking or movement of employees.

Reduced fatigue in employees.
Higher productivity.
Simplified and quick stock management.
Speedy retrieval of stock.
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MODULE 5 : PLANNING RESOURCE REQUIREMENTS
So far in planning our warehouse we have considered the work methods, equipment and space
requirements. The task now is to plan/estimate the requirements for people and equipment in order
to operate the warehouse facility.
There is a trade-off to be made between the people and handling equipment requirements for any
given workload.
In global warehouse operations, which are run like commercial operations, the focus is on
minimising the cost of running the operation. In this situation, it is often better to invest in handling
equipment and reduce the dependence on people resources.
However, in field operations, many humanitarian organisations prefer to hire local labour which
provides employment instead of relying on handling equipment.
The requirement for the total amount of resources required will be determined by the amount of
goods flowing into and out of the warehouse, as shown in the diagram below.
Deliveries/day Despatches/day
and and
Items/delivery Items/despatch
or or
Tonnes/delivery Tonnes/despatch
Goods Put Picking Goods

GOODS IN Receipt Away Despatch GOODS OUT
As shown above, the warehouse operation is composed of 4 key work activities :
Goods receipt.
Put away (into the bulk storage area).
Picking (from the bulk storage area).
Goods despatch.
To estimate the resource requirement for the whole warehouse, we start by estimating the
requirements for each of the key work activities in turn. Then we combine the resource requirements
for all activities together, taking into account the way that the activities are phased during the
working day, in order to make an estimate of the total resources required.
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In order to do this, we need to understand the concept of work cycles and then we will follow an
example of how to use them to plan the level of resources.
WORK CYCLES
A work cycle is the series of steps that are carried out in order to complete a particular work activity.
Each work activity may be composed of a number of different work cycles because of the variety of
goods being handled in terms of the size and weight of items, the way that they are packaged and
the method being used.
For example, bulk deliveries of rice may be handled differently than cases of medical supplies and
this will apply to all the work phases in the warehouse.
Therefore, a work cycle is defined by a combination of the following items :
The goods to be moved.

The staff required.
The equipment to be used.
The method to be used.
So, the process for estimating the resource requirements for each activity is as follows :
Identify the key steps in the activity.

Define the work cycles required for the activity.
For each work cycle, estimate the work rate.
Calculate the resource requirement for the work cycle.
Add together the work cycle requirements to estimate the requirements for the whole work
activity.
This same process can be used to find the resource requirements for all the key warehouse
activities.
In order to illustrate the process described above, let’s look at how we would estimate the resource
requirements for the Goods Receipt activity through the use of some examples. The examples given
are typical examples. In practice, the work cycles and work rates will depend entirely on the situation
in a particular warehouse operation.
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EXAMPLE - ESTIMATING RESOURCES FOR THE GOODS RECEIPT
ACTIVITY
This example uses the concept of work cycles to plan the level of resources for a goods receipt
operation. The example works through these steps:
Identify key steps.

Define work cycles.
Estimate work requirements.
Calculate resource requirements.
Calculate total resources.
IDENTIFY KEY STEPS
As shown in the diagram below, we can divide the goods receipt activity into the following steps :
Unload the goods from the vehicle.

Move the goods to the goods receipt area.
Place the goods in the designated area.
Return to the vehicle.
Repeat until the vehicle has been unloaded.
MOVE GOODS
UNLOAD PLACE IN
VEHICLE GOODS-IN
AREA
RETURN
Movement distance
The time to complete this activity will be dominated by the time to unload the vehicle plus the time to
move the goods to the goods-in area. Obviously, the movement time depends on the distance and
the speed of movement.
Therefore, when planning a goods receipt activity, it is likely that there will be a number of different
work cycles which will depend on the type of goods being unloaded and the equipment being used
to unload and move the goods.
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When defining work cycles, in most cases, the vast bulk of the work can be defined with just a few
work cycles, say 80% of the volume. This is normally accurate enough for planning purposes.
DEFINE WORK CYCLES
The table below defines three example work cycles to deal with three different types of goods in
Goods Receipt.
Work Cycle 1 Work Cycle 2

Work Cycle 3
Goods 25kg sacks, loose Goods on pallet, 500kg
20 kg Cartons, loose
Movement distance 10 metres 10 metres 20 metres
Staff 2 manual staff 1 Fork Lift Truck driver
1 manual staff
1 Fork Lift Truck driver
Equipment Sack truck Fork lift truck Empty pallet
Fork lift truck
Method description Load 3 sacks at a time Unload and move pallet Load 50 cartons per
onto sack truck. Move to to goods-in. Return. pallet. Move to goods-
goods-in. Return. in. Return.
Work rate Sacks or kg per hour Pallets per hour Cartons per hour
ESTIMATE WORK RATE
The objective is to estimate a ‘standard time’ or a ‘work rate’ to perform a specific work cycle.
There are three main ways to estimate the work rate :
Use industry planning standards.

Use historical data.
Conduct a time study.
USE INDUSTRY PLANNING STANDARDS
Industry Planning Standards are detailed lists of ‘standard’ times to complete a whole range of
warehouse activities. The table below is an example of standard times for an operator to move a
range of products using a range of equipment.
Operator walking empty handed or with less than 0.5kgs 60m/min

Operator walking with pack less than 20kgs 45m/min
Operator walking with sack truck 45m/min
Operator walking with 4 wheeled trolley 30m/min
Operator driving forklift truck 120m/min
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The idea is that any work cycle can be broken down into its detailed steps and that planning
standards can be used to calculate a ‘Standard Time’ for any job. These can then be used to
calculate resource requirements.
Provided that the warehouse activity being planned is similar to industry standard, this approach can
provide a relatively accurate estimate of work rate for any given job. However, the method is time
consuming and any difference in practice between the actual situation and the industry standard will
decrease the accuracy of the estimate.
USING HISTORICAL DATA
Information often exists within an organisation relating to times to carry out warehouse tasks in
existing situations. If so, this information can be used to provide a simple way of estimating work
cycles in new situations.
CONDUCT A TIME STUDY
Time study is the original technique of work measurement. It is concerned with the way in which
work is done and the time it takes to complete tasks. This leads to the establishment of a target time,
which subsequently permits results to be compared.
CALCULATE THE RESOURCE REQUIREMENTS FOR EACH WORK CYCLE
The amount of resource required for each work cycle depends on the work rate and the amount of
work to be done.
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Example
Suppose that we have defined a work cycle for unloading sacks of rice weighing 25 kgs and we
have also estimated the work rate, as in the table below.
Work Cycle 1
Goods 25kg sacks, loose

Movement distance 10 metres
Staff 2 manual staff
Equipment Sack truck
Method description Load 3 sacks at a time
onto sack truck. Move to
goods-in. Return.
Work rate 90 sacks per hour
Q. What resources will be required to unload 10 deliveries of 100 sacks each in an 8 hour
period?
A. The total number of sacks to be unloaded = 10 x 100 = 1000 sacks.

The number of sacks that can be unloaded in an 8 hour period using Work Cycle 1 = 8 x 90
= 720 sacks.
This leaves 1000 – 720 = 280 sacks left to be unloaded.

The time required to unload 280 sacks = 280/90 = 3.1 hours.
Therefore, the resources required are :
1 sack truck and 2 staff for 8 hours, plus.

1 sack truck and 2 staff for 3.1 hours.
Note: This example calculation does not take into account anything about the timing of the
deliveries. In practice, we would have to look at the delivery schedule – if the deliveries arrive
in groups then the peak resource requirement will be higher than that calculated above.
This exercise is repeated for each work cycle defined for the Goods Receipt activity.
CALCULATE THE TOTAL RESOURCES REQUIRED
To make an estimate for the total resources required for goods receipt, we must add together all the
estimates of the work cycles defined.
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Example
In this example, 3 work cycles have been defined for the Goods Receipt activity and work rates have
been estimated, as shown in the table below.
Work Cycle 1 Work Cycle 2 Work Cycle 3

Goods 25kg sacks, loose Goods on pallet, 500kg 20 kg Cartons, loose
Movement distance 10 metres 10 metres 20 metres
Staff 2 manual staff 1 FLT driver 1 manual staff
1 FLT driver
Equipment Sack truck Fork lift Truck Empty pallet
Fork Lift Truck
Method description Load 3 sacks at a time onto Unload and move pallet to Load 50 cartons per
sack truck. Move to goods- goods-in. Return. pallet. Move to
in. Return. goods-in. Return.
Work rate 90 Sacks per hour 30 Pallets per hour 150 Cartons per hour
Q. The Goods Receipt activity must handle the following volume of deliveries :
1000 x 25 kg sacks of mixed product.
24 pallets.
500 x 20 kg cartons.
What is the minimum level of resources that will be required to handle this volume of goods
in an 8 hour period?
A. Work Cycle 1 - As above, the resources required are : 1 sack truck and 2 manual staff for 8
hours, plus 1 sack truck and 2 manual staff for 3.1 hours
Work Cycle 2 - The time to handle 24 pallets = 24/30 hours = 0.8 hours
Therefore, the resources required are 1 FLT driver and 1 FLT for 0.8 hours
Work Cycle 3 - The time to handle 500 cartons = 500/150 hours = 3.3 hours
Therefore, the resources required are 1FLT driver, 1 FLT, 1 manual staff for 3.3 hours
To calculate the minimum resources required, we need to schedule the work cycles in the 8 hour
period. We can do this by drawing a simple chart, showing when the work cycles will take place
during the period, as below :
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Time (hours)
1 2 3 4 5 6 7 8
Work Cycle 1 – 8 hours
Work Cycle 1 – 3.1
hours
Work Cycle 3
– 3.3 hours
4 manual staff 3 manual staff
2 sack trucks 1 FLT driver
1 FLT
1 sack truck
2 manual staff 2 manual staff

1 sack truck 1 sack truck
1 FLT driver
1 FLT
The total resources required during the 8 hour period are listed in the bottom row of the chart.
Therefore, if we assume that the fork lift truck driver will also act as a manual member of staff for
Work Cycle 1, the total resources required for Goods Receipt are :
1 FTL driver
3 manual staff
2 sack trucks
1 forklift truck
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MODULE 6 : MANAGING WAREHOUSE OPERATIONS
Now that we have designed the warehouse and thought about how it will operate we need to
consider issues around managing operations. In this module we will consider:
Planning the workload.

Allocating resources.
Receiving goods.
Storing goods.
Assembling consignments.
Despatching consignments.
Disposal of goods.
Pest control.
Defining control requirements.
PLANNING THE WORKLOAD
The prompt clearance of goods received, and the prompt despatch of consignments, requires the
correct resources to be allocated to the tasks.
The volume of workload will frequently fluctuate on a day-to-day basis. Also, the volume may be
unpredictable to some extent, especially the unexpected arrival of goods and/or the unexpected
volume of goods received.
The tasks needed to be carried out to achieve the aims will therefore fluctuate on a daily basis. For
example, the receipt activity may be higher on particular days of the week.
Peak workloads can be handled using hired resources (people and/or equipment), to supplement
any permanent resources.
Planning of the workloads should be on a day-to-day basis to enable the correct allocation of
resources to be identified and allocated to the required tasks.
If the goods to be handled vary significantly in terms of their handling requirements, for planning
purposes, they may be classified into product handling groups. This ensures that the appropriate
resources are allocated to handling the goods. The table below gives an example of how goods
might be grouped.
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Stock Product Outward Movement Stock Storage Handling Product
Item Characteristics Volume Frequency Holding Method Method Group
001 Loose sacks 4000 400 2000 Block Sack 1
stack truck
002 Palleted goods 500 50 250 Rack FLT 2
003 Loose cartons 100 10 500 Rack Pallet/FLT 3
The resource requirements are defined by the inbound and outbound workload that the warehouse
operation must handle. The total resource requirements for each of the key activities in the
warehouse are determined as follows :
Identify the inbound workload.

Identify the storage requirement.
Identify the outbound workload.
IDENTIFY THE INBOUND WORKLOAD
The volumes to be received, by individual item, are required on a day-by-day basis so that the
incoming workload can be planned.
If any goods are required to be sent immediately to the next stage in the supply chain or onwards to
the beneficiaries, they must be identified separately. These goods will not be put into stock but will
be made available immediately for goods despatch.
Time based schedules of inbound stock are created showing the volumes, handling groups and
immediate shipment requirements. These form the basis for the allocation of resources, and for
planning the storage requirements.
IDENTIFY THE STORAGE REQUIREMENT
The requirements for stock location are identified before the stock arrives, so that pre-allocated
space is available for them.
Locations for the goods are allocated and recorded in order to prevent these locations from being
allocated more than once.
The product handling groups are often the basis for identifying which storage areas the products are
to be put into. The following are examples of how this might be done :
Fast moving items may be grouped together. The group is allocated space close to the
despatch area to speed up stock retrieval.
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Items on pallets to a height of only 0.5 metres may be allocated to an area designed to hold
pallets of this height.
Product volumes are grouped together by storage area and by handling group, so that the
total requirement for each category can be used to calculate the resources required.
IDENTIFY THE OUTBOUND WORKLOAD
The picking and packing operations needs to be planned to ensure that consignments are available
for issue in time to meet the transport delivery requirements.
Some consignments will consist of individual items whilst others will be bulk orders for large
quantities of the same items.
IDENTIFY THE PICKING QUANTITIES
Picking of individual items is one of the major tasks in many warehouses. Identifying the quantities to
be picked enables the correct allocation of resources to the task.
If more than one picking method has been defined, the quantities to be picked by each picking
method need to be determined so that the appropriate resources can be allocated to the task.
IDENTIFY THE BULK PICKING QUANTITIES
Some items are transported in bulk quantities and will be picked in quantities that do not require
breakdown of their primary storage quantity.
Prior to detailed picking by individual items, consignments can be consolidated into bulk quantities
for picking and moving to the pick area.
The total volumes of bulk pick items need to be identified.
IDENTIFY THE PACKING QUANTITIES
There may be a need to pack individual items that make up a consignment to create a single
transportable container.
The quantities for each method of packing need to be identified, so that the correct resources can be
allocated to the task.
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CREATE PICKING AND PACKING SCHEDULES
Picking and packing are frequently the most time consuming and labour intensive operations in a
warehouse.
Schedules of what is to be picked and packed, at what time, and in which order are created to
facilitate efficient operations.
The transport loading schedule is used to determine the order and timing of the pick and pack
schedules.
IDENTIFY LOADING AND DESPATCH REQUIREMENTS
Consignments need to be collated and prepared for loading onto vehicles, or despatched by the
selected method.
The quantities for loading and despatching need to be identified so that the resources required to
carry out these activities can be planned.
ALLOCATING RESOURCES
If warehouse operations are to work efficiently and effectively, the correct resources need to be
allocated to the individual functions. For example, if insufficient pickers are allocated to the picking
task, the consignments may not be available in time to meet the loading schedule.
The volume data is used to calculate the workload for inbound goods clearance, putting to stock,
picking and packing, and for despatch.
The workload is then used to determine the number of resources required to achieve the tasks
within the required time frames. The resources can then be allocated.
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DETERMINE THE RESOURCE REQUIREMENTS
The work rates identified for each of the work cycles in the key warehouse activity areas are used for
calculating the resource requirements. In general the work rates for each key activity area are
defined as follows :
Goods receipt – units unloaded & received per hour.

Put away – units moved to bulk storage per hour.
Picking – units picked per hour.
Goods despatch – units loaded and despatched per hour.
The resource requirements are calculated by dividing the amount of work to be done in the required
time by the work rate for the relevant work cycle.
For example :
The required output for a picking operation is 6950 cases of oil to be picked.
The picking must be complete by 1.30pm to allow loading to take place, and the pickers start
work at 8.00 a.m.
The work rate to be used is 120 cases picked per picker per hour.
The total work is 6950 (the cases to be picked) divided by 120 (the work rate).
6950/120 = 57.9 hours of work.
The pickers are available for 5.5 hours (if the work is to be completed within the required time
frame).
The number of pickers required is 57.9/5.5 = 10.5 pickers.
It will then be a management judgement as to whether 11 pickers are allocated to complete

the task or 10, with an acceptance that the last consignments may not be available by
1.30pm.
ALLOCATING RESOURCE REQUIREMENTS
In general, some resources in the warehouse operation may be full time employees and owned
equipment. However, especially for operations which have a large variability in the volume of goods
to be handled, the organisation may also use temporary staff and hired equipment.
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Temporary staff tend be used for manual operations. The type of equipment most often hired is
handling equipment e.g. fork lift trucks.
ALLOCATE OWN RESOURCES
When the resource requirements have been calculated, the specific people and equipment are
allocated to the individual tasks.
Resources allocated will probably include the following :
Mechanical handling equipment such as forklift trucks, hand pallet transporters and picking
trucks.
Packing and palletising equipment.
Operatives for manning the equipment.
Operatives for manual tasks.
Space for tasks that do not have a pre-allocated space, for example the break down of
pallets and re-palletisation.
The types of resources required are determined by the tasks and the product handling
groups to be processed.
ARRANGE HIRED OR CONTRACTED RESOURCES
Hired or contracted resources can be either equipment or people.
They may be required to :
Provide additional resources during peak workload periods.
Carry out one off tasks that are additional to the normal work of the warehouse.
Provide additional personnel when absence through sickness is above the planned estimated
levels.
To provide sufficient resources when recruitment is insufficient to fill permanent vacancies.
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ORGANISE HIRED LABOUR
Hired labour may not have any specific knowledge of the operation, or have attained the full specific
skills required. If so, a short induction into the tasks and operation will be required so that they can
be effective.
Labour may be hired on an individual basis or through an intermediary and there are pros and cons
for each approach.
Disadvantages of hiring through an intermediary :
o More difficult to control the quality of the labour.

o Need to establish the trustworthiness of the intermediary.
o Possible loss of neutrality if dealing with one local group and not others.
o Probably higher cost due to fee for the intermediary.
Advantages :
o Easier to manage.
o Faster to acquire labour.
RECEIVING GOODS
The goods receipt activities have an impact on the operations of the whole warehouse. The most
important function of the goods receipt area is the ability to receive, check, and distribute into the
main storage areas as quickly and efficiently as possible.
There is always the risk of congestion in the goods receipt areas - in both the control of the vehicles
bringing in the product, and on the goods receipt bays in general.
Ideally, the timing of all deliveries should be planned in advance in order to ensure the orderly arrival
of goods. However, deliveries may arrive unannounced and planned deliveries may arrive early or
late.
In some organisations, the warehouse manager may not have direct responsibility for the timing of
goods deliveries. And in some situations, the organisation as a whole may not have full control over
goods receipts, particularly in the early phase of a response to a humanitarian situation.
Therefore, particularly for the receipt of goods, resources may have to be deployed in a flexible way
to cope with unplanned requirements. Aspects to be considered are :
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Checking delivery details.
Unloading of vehicles.
Moving stock to receipt area.
Quality control of receipts.
Repackaging/palletisation requirements.
Clearing receipts.
CHECK DELIVERY DETAILS
Before the goods are unloaded, the delivery is checked to ensure that it is correct.
The following are likely to be checked :
Is the delivery at the correct location?

Time of delivery.
Is the paperwork correct?
The quality of the delivery; at this stage it is not the quality of the goods.
The location where the stock is required, as there may well be more than one goods receipt
area.
If there is a requirement to pack or palletise the goods after unloading.
There will be occasions when unscheduled receipts arise. Therefore, there must be a process in
place for handling both scheduled and unscheduled receipts.
For unscheduled receipts, the reasons for the occurrence must be identified, a record made of the
receipt and a decision made on how to handle the receipt.
When the receipt has been checked and agreed, the vehicle is called forward for unloading.
UNLOAD VEHICLE
Vehicles that are not moving are a wasted resource, so they should be unloaded without
unnecessary delays.
Congestion in the receipts area can cause difficulties in the efficient flow through the warehouse; so
receipts should be cleared rapidly and efficiently.
If the goods are received in loose form, it must be decided whether they need to be palletised.
Sometimes, goods received are intended to be moved directly onto another vehicle for onwards
transportation, without being put into storage. This activity is called cross-docking. Cross-docking is
often used in emergency situations.
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Where cross docking requirements are identified during the planning of the inbound workload, the
goods should be moved directly from the vehicle to the cross docking area allocated for them.
In operations where cross-docking takes place, an appropriate system is required in order to

maintain accurate stock records.
MOVE STOCK TO RECEIPT AREA
As goods are physically unloaded from the vehicles they can be either :
a) Moved directly to their allocated stock locations or,

b) Placed into a receipts area.
Some goods will be received packed, ready for storage, and with no requirements for quality checks
to be made before storage. These can be moved directly to their stock locations.
Goods that require checking or repacking can be placed into a designated receipts area to await
further action.
QUALITY CONTROL OF RECEIPTS
Quality control during physical receipt of goods will normally check the following items :
Physical check of goods

Quality inspection
Goods in quarantine
PHYSICAL CHECK OF GOODS
When the consignment arrives at the warehouse the receiver must:
Conduct a visual inspection

Check the weights
Reconcile physical count with paperwork
Inspect the quality
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Conduct a visual inspection
The visual inspection is designed to check whether the consignment looks in good condition and has
the right quantities. In particular the receiver should check for any damage, and for boxes or bags
that appear to have been opened. It is important not just to check those items that are in clear sight,
but also those that may be buried inside a pallet. A good visual inspection should also be able to
identify if there is the presence of insects, foreign matter or excessive humidity.
To help with this visual inspection refer to the table of Storage Recommendations in the section
Understanding the Product Characteristics in Module 2.
Check the Weights
There are many tricks that are played with weights of product. It is important to conduct a random
check on bags and boxes to see if the weight is appropriate. Often product is removed partly from
bags or boxes, but it can appear to have been untouched.
Another way to check the weight is to weigh the truck before and after unloading ensuring that the
same number of people are in the truck both times.
Reconcile Physical Check with Paperwork
Clearly it is necessary to check that the quantity received tallies with the accompanying paperwork.
It is also necessary to check if this quantity is what was expected on the original purchase order.
Inspect Quality
Checking the quality of the product may be simple in some cases, but in others it may need
specialist help. Examples would include: medicines, water and sanitation equipment. Foodstuffs
also require a specialist check.
QUALITY INSPECTION
It is common for quality control of some products, especially foodstuffs, to be tested by a quality
control company. This provides an independent assessment and such companies have the skills
and equipment to do it.
For other products, such as medicines, quality can be insured before and during the procurement
process. By visiting suppliers and inspecting them before approval is given and by regular quality
visits, the need for subsequent checks can be minimised. In such cases only a physical check is
necessary.
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Quality analysis requires a laboratory analysis of a representative sample against the product
specifications. A representative sample is a mix of the contents of several bags or boxes, picked
randomly throughout the receipt process. The analysis can be conducted locally if there is a reliable
provider or it will have to be sent to head office.
GOODS IN QUARANTINE
Goods will not be accepted until the inspection is finalised. This process could take sometime, so it
will be necessary to have an area where these goods should be held whilst awaiting acceptance.
This area must be physically separate to the storage area with strict controls in place to ensure the
goods are not used.
Where numbers are incorrect, or the products damaged, the situation should be handled under
routine procedures identified by management.
To enable quick clearance of goods held for quality control checks, the quality department should be
notified quickly so that samples can be taken and the remaining goods moved to their storage
locations.
REPACKAGING/PALLETISATION REQUIREMENTS
If the goods are received in loose form it must be decided whether they need to be palletised.
Should this be the case, it can be done inside the vehicle, on the floor outside the vehicle, or in a
designated area of the warehouse.
Mechanical handling equipment, operatives, and palletising equipment are identified during the
process of allocation of resources.
CLEAR RECEIPT
When the quantity and overall condition have been accepted, the receipt can be cleared and the
delivery vehicle released.
The final step in the receipt process is the clearance of paperwork and notification to stock control of
the cleared receipt.
Notification may be through an update/amendment to the stock control computer system, or by the
transfer of paperwork.
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STORING GOODS
The rapid and accurate movement of goods into their allocated storage locations is a high priority in
any warehouse.
Stock not moved can cause congestion in a high throughput facility.
Stock misplaced into the wrong location can result in it being unavailable when required.
Aspects that need consideration in this area are:
Identifying required stock location.

Moving stocks to location.
Notifying inventory/stock control of the storage location.
IDENTIFY REQUIRED STOCK LOCATION
Stock locations can be allocated by a warehouse management system, or manually.
The product handling group will usually identify the area of the warehouse into which a particular
item is to be placed.
The specific location will depend on the location rules being used, but could use a combination of :
Space available.
Distance to the empty locations.
Number of goods to be stored.
Frequency of demand.
Picking methods that will be used to retrieve the goods.
Identification of the correct locations is important in maintaining a good flow through the warehouse
operation.
Recall also that we may decide to split the warehouse into zones. Different zones contain goods
with different characteristics, such as medicines and kitchen sets. They might also contain goods
stored in different sized locations.
The zones are then split into locations.
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MOVE STOCK TO LOCATION
When locations have been allocated, the priority is to move the stock into them quickly, to prevent
backlogs causing delays to the system.
It is essential that the goods are placed into the correct locations to prevent them being "lost" in the
system. To this end, it is advisable to confirm the actual location used by adding this information to
the stock record system.
NOTIFY INVENTORY/STOCK CONTROL
Once the stock has been put into location, and the location confirmed, the inventory management or
stock control department need to be informed of the final put-to-stock situation.
This may be part of a computer system, or could be through the creation of manual documents.
Stock should not be available for allocation to consignments until notification has been given that the
stock is in location.
ASSEMBLING CONSIGNMENTS
The picking of consignments is the start of the process within the warehouse that leads to a
consignment being despatched.
Picking needs to be accurate and swift if the lead times stated by the organisation are to be met.
Packing is required when the items are not stored in a condition that allows them to be moved
without damage.
Packing may also be necessary when a consignment consists of more than one item that needs to
be delivered together.
Aspects to be considered in assembly are :
Receive pick lists.

Pick items.
Pack consignments.
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RECEIVE PICK LISTS
Pick lists can be received through a computer order processing system, or manually.
Computer generated lists will usually be consolidated by beneficiaries, locations or part numbers,
depending on the techniques used for the picking process.
Manual lists may simply consist of a copy of the authorised list of items to be picked.
PICK ITEMS
The aim of picking is to select items from stock and collate them together according to the
consignment requirements.
The general principle used in picking is to minimise the time taken in travelling by the order picker.
PACK CONSIGNMENTS
Consignments may require packing in order to allow convenient handling and to protect them during
transit until they reach beneficiaries.
The appropriate type of protective packaging to use depends on the products themselves and the
method by which they are being moved. The following points should be taken into account :
The nature of the goods, e.g. sensitivity to heat, light, moisture and vibration/shocks.
The transport mode to be used and the handling methods.
The environment that the goods will be exposed to, e.g. temperature, moisture, dust.
The size and weight of the package to allow easy handling e.g. no more than 50kg per unit.
The extent to which the package will be dropped or thrown during handling.
Beneficiaries may require consignments of mixed goods to be palletised to their own specifications
or to aid handling.
Packaging requirements should be estimated, if actual details are not available, and resources
allocated to this.
Apart from people, other resources include the packaging material itself, space for the work, tables,
chairs, tape and dispensers and any specialist equipment required for shrinkwrapping, binding or
filling.
Packages should be clearly marked or labelled with the following information :
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Reference number of the consignment.
A list of the contents and quantities.
Destination.
Weight.
Any special handling requirements e.g. ‘fragile’ or ‘this way up’.
Dangerous goods markings, if applicable.
DESPATCHING CONSIGNMENTS
Consignments need to be despatched in a sequence that will meet the transport load plan.
Consignments should be available when they are required, otherwise they can cause a logjam in the
warehouse flow.
Consideration needs to be given to :
Consolidating consignments.
Locating consignments for loading.
CONSOLIDATE CONSIGNMENTS
The transport load plan will specify the consignments that are to be loaded onto the same vehicle.
The plan will also specify the sequence of loading and the time requirements.
Consignments, which have been picked, should be consolidated to form vehicle loads in accordance
with the plan.
LOCATE CONSIGNMENTS FOR LOADING
Vehicles sitting waiting (whilst consignments are being picked) are an inefficient way of managing
the loading of consignments.
It is common for consignments to be consolidated into loads in an identified area of the warehouse.
Each load is given a specified area and consignments for that load are placed there.
When the load is complete, and the vehicle ready, the consignments are loaded onto the vehicle in
the sequence determined by the transport load plan.
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DISPOSAL OF GOODS
Careful handling of goods in stock and proactive stock rotation should prevent stocks expiring,
becoming obsolete or being damaged in the warehouse.
Warehouse management should monitor information on stocks with expiry dates. When the expiry is
short this information should be shared within the organisation and even outside, so that:
Items in stock can be transferred to another operation.

Items can be loaned or donated (with adherence to organisation procedures).
Items can be sold (with adherence to organisation procedures).
Sometimes, it will be necessary to dispose of stock. The disposal of the goods has to be arranged
as soon as possible. Spoiled or damaged goods have to be separated from usable supplies to avoid
further damage. The disposal of goods requires:
Strict compliance with organisation procedures.

Discrete conducting of the disposal process.
Recording of the destruction actions.
Arrangements for specific products are given below.
MEDICAL ITEMS
The disposal of expired medicines needs to take place in compliance with the national legislation
and in a manner that does not risk public health. High temperature incineration is the best way to
dispose of expired drugs. It is particularly important to dispose safely of used syringes and needles
so that they are not reused or found by children. Contaminated needles can transmit infections such
as hepatitis and HIV.
FOOD
When food is expired and definitively not fit anymore for human consumption, it may be recycled into
animal food. This way will avoid a complete loss of the food. If no recycling is possible, the best way
to dispose of food is to bury it in the ground ensuring that neither people nor animals will dig it up.
This destruction should take place in agreement with local authorities.
OTHER PRODUCTS
Items such as blankets, tarpaulins, damaged pallets are the easiest items to recycle. So, before
destroying such products, look at the possibility of recycling. If destruction is the only solution, the
best way is to burn them.
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PEST CONTROL
Preventive measures are the first steps to be taken with regard to pest control. These measures are
not always sufficient to prevent pests from infesting products. It is considered that 5% to 10% of the
world cereal production is damaged by a multitude of pests during storage.
The aim of pest control is to protect and preserve the goods stored, either by killing the insects
(curative measures) in all their stages of development, eggs, larvae, chrysalis and adults, or by
preventing the infestation of stocks (preventive measures).
Inspections should take place on a regular basis. Workers should look at shelves and pallets daily
for signs of theft, pests or water damage and for deterioration due to climatic conditions.
If an infection is found, isolate the infested goods from the ones that are not infested and refer to an
expert so that the best solution can be identified. The choice of the optimum product, dosage and
method of application is decisive and should be left to an expert.
Any serious infestation should be reported.
ACTION AGAINST INSECTS
Chemical methods are the most widespread at present but it must be remembered that chemicals
may be dangerous to people and care needs to be taken in the use of such substances.
The purposes of each treatment is as a preventive measure to eliminate any possibility of infestation
of cereals or warehouses by parasites, or as a curative measure to reach and kill as much of the
parasite population as possible.
Different methods of application exist:
Spraying of warehouse: preventive treatment with lasting effects.

Treatment of the surroundings: curative treatment without lasting effect.
Direct spraying of foodstuffs: preventive treatment with lasting effect; given their LASTING
EFFECT, the toxicity of some products is lengthy and careful surveillance must be kept on
the frequency of treatment so as to avoid accumulating DANGEROUS DOSES.
Fumigation: curative treatment with no lasting effect.
ACTION AGAINST RODENTS
Rats destroy packaging, consume foodstuffs and medicine and contaminate them with their
excrement and urine. The infestation of the warehouse by rats must therefore be avoided at all
costs.
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Taking measures such as improving the state of the warehouse itself and the area around it to
eliminate places where rats can breed can prevent infestation. Traps can be used or bait laid down
containing rat-poison.
To evaluate the degree of infestation one must attempt to establish :
Whether it is limited to the depot or whether it extends over a wide area;

Where in the surrounding area can the rats obtain their food and water;
How they gain entrance. Rats seldom move about in an open space but prefer to stay near a
hiding place. Look for their traces, the damage caused by their teeth and their excreta.
Rat-poison should be in the form of bait and be capable of remaining intact for a long time before
being eaten. It must remain appetising, clean and fresh and be similar to the food rats normally eat.
Rat poison should be placed in shaded, covered, peaceful and quiet location. Rats don't like to eat in
open where they are exposed. A simple piece of wood or a panel is enough to cover the bait.
Another effective measure is the use of rat or mink traps and to move them frequently.
Cats can be kept within the compound of the warehouse but they are NOT allowed inside the
warehouse.
On top of traditional solutions, new techniques using the principle of the Scarecrow and the sound of
Pray Birds have been developed recently and can be used against birds and rodents. These have
the advantage of being long-lasting, often cheaper for durable setups and are more environmentally
friendly. Such a solution could possibly be the one you need, according to your warehouse set-up
and situation.
DEFINING THE CONTROL REQUIREMENTS
The warehouse operations should be planned and managed in such a way as to maintain control of
the flow of goods and materials from the point of receipt to the point of despatch.
The operational controls should be linked to a system of documents which facilitate the control and
act as a record of the activities and the flow of goods through the operation.
The documentation and information system may be paper based, based on computer information or
a mixture of both.
The system should encompass all the warehouse activities and cover :
Operational performance measurements.

Identification of the control requirements for each operating area.
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OPERATIONAL PERFORMANCE MEASUREMENTS
Operational management requires feedback in the form of operational performance measurements

in order to determine the effectiveness of management actions. There are two kinds of
measurement that are important in a humanitarian warehouse operation :
Service level measurements – remembering that the objective of the warehouse operation
is to make humanitarian goods available for delivery to beneficiaries; we need measurements
that indicate the efficiency of the operation in this respect. This is the principle measurement
of the supply chain performance in a humanitarian situation. Examples of this kind of
measurement are as follows :
On-time consignments (% of consignments loaded on time).
The fill rate of the consignments (% of goods present in consignments compared to

requirements/orders) e.g. Suppose that 100 items have been ordered but that only 95 items
are delivered. The fill rate = 95/100 = 95%.
Picking accuracy (% of items picked according to the picking list).
Utilisation of resources – in humanitarian supply chains, the money required to deliver

goods to beneficiaries is important because it represents the ‘cost efficiency’ of the
humanitarian supply chain. In terms of a warehouse operation, the following are examples of
utilisation measurement :
Productivity of resources measures the output of the operation divided by the input e.g. items
handled per person day, items picked per person day. The normal approach is to establish a
productivity ‘standard’ and to compare individual performance with this standard.
Utilisation of resources e.g. % of warehouse space used compared with the space available.
A warehouse has been well planned if the utilisation reaches 100% at times of peak demand.
If the utilisation is consistently far below 100% then this may indicate that a smaller
warehouse could be used.
Goods wastage (% of items lost due to damage, theft or out of date) The target is minimum
wastage.
The most appropriate measurements to use depend on the situation of the warehouse operation and
the objective of the humanitarian organisation and must be defined by warehouse management.
The importance of such information relates to improvement. If measurements are being made it
enables improvement activity to be evaluated. This is much more useful to operational management
than comparing their operation with an entirely different one.
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IDENTIFYING THE CONTROL REQUIREMENTS FOR EACH OPERATING
AREA
Each operating area has unique control requirements.
The requirements need to be managed separately within that operating area.
Also, the interfaces and the overall flow of goods through the warehouse need to be controlled.
The requirements should be controlled by one overall system for maximum efficiency.
Savings and benefits accrue from :
Increased productivity of resources.

Accuracy of 'paperwork' and task instructions.
Better quality of management information.
Reliable stock information, to aid location, rotation, quality assurance and stock-taking.
The following lists the control requirements for the main operating areas of :
Goods receipt.
Bulk storage.
Picking and load assembly.
Goods despatch.
GOODS RECEIPT
Goods receipt schedules require suppliers to book in deliveries.

The schedule information will include arrival time, items and quantities and the type of load
(i.e. palletised or needing palletising).
Receipts will interface with the purchase order and inventory systems in order to reconcile
items and quantities.
Movement to bulk storage will be recorded.
The schedule will allow an estimate of the labour hours to be calculated in order to determine
the resource required to unload and put away to storage.
Strictly managing the schedule allows peaks and troughs in the goods receipt operation to be
levelled out.
Where there are quality control checks required and perhaps quarantining of goods for a
period of time, the system needs to manage this.
Volume data and resource hours are required to allow utilisation and performance of
resources to be calculated.
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BULK STORAGE
Control information is required to :

Facilitate prompt put away of incoming stock.
Identify opportunities to move product direct to the picking locations.
Find the stock when it is needed for pick face replenishment or despatch.
Correctly rotate stock.
Assist in the detection, tracing and reconciliation of errors, which might occur.
In a mixed storage environment, the system should hold product and unit load information to enable:
The avoidance of crushing through block stacking.

The selection of correct slot heights to optimise space utilisation.
The adherence to quality control requirements.
The identification of goods requiring special storage arrangements, e.g. flammables,
temperature-sensitive products etc.
The system should record and allocate space, so as to maximise the utilisation of storage space and
to provide for rapid and efficient retrieval.
The system should manage activity in the bulk storage area so as to minimise travel time for labour
and equipment.
Volume data and resource hours are required to allow utilisation and performance of resources to be
calculated.
PICKING AND LOAD ASSEMBLY
Order picking is the most challenging activity to control.

The stock location system should include picking locations as well as the bulk storage
locations and should control transfers between locations.
The system will capture consignment requirements and translate the information into pick
lists.
These pick lists should be sequenced so as to minimise travel time whilst maximising the
volume picked on each picking run.
The system should be able to differentiate and control differing types of picking method, i.e.
consignment, line and zone picking.
Information on the volume of orders to be picked is required to plan the required labour and
equipment resource.
The system needs to show when replenishment of the picking location is needed.
An interface is required with the load planning system to determine the sequence in which
orders should be picked and the loads assembled.
Consolidation of orders into loads should be controlled. The system needs to interface with
the goods despatch to ensure loads are picked and assembled to meet despatch schedules.
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GOODS DESPATCH
Load planning schedules are required to define the number, size and type of vehicles
required to deliver the consignments.
The schedule will also stipulate loading times and sequence load assembly in order to
ensure vehicles leave at the right time to meet customer delivery windows.
The schedule should calculate an estimate of the resource required to carry out the loading
activity.
Strictly managing the schedule allows peaks and troughs in the goods despatch operation to
be levelled out.
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MODULE 7 : CARE OF WAREHOUSE RESOURCES
Warehouse equipment is maintained to prevent accidents and breakdowns from occurring.
Maintenance activities consist of inspections, regular servicing and monitoring performance for
failure trends, as this will enable symptoms to be recognised before failure occurs.
Equipment Maintenance has a strong health and safety bias. Often Health and Safety legislation will
impose on management an obligation for safe systems of work. Ensuring safe policies and
procedures of work will require an examination of men, machinery, methods, materials and
environmental aspects.
This module covers :
Planned maintenance.
Maintain equipment.
Maintain building.
Completion of maintenance records
PLANNED MAINTENANCE
The purpose of planned maintenance is to prevent breakdowns from occurring - partly by

inspections and servicing, but also by monitoring performance for failure trends, so symptoms can
be recognised before failure occurs.
A planned approach to maintenance is required that includes inspections, lubrication, minor

adjustments, planned repairs, and overhauls.
For each item of equipment that requires maintenance, a maintenance schedule should be drawn
up, indicating dates in the future when maintenance and/or inspection should take place and the
actions that should be taken at each point in time. If a blank space is left next to each item, a
confirmation signature can be added, when the maintenance is conducted, to provide an audit trail
that the maintenance has taken place.
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The diagram below shows an example of a simple maintenance schedule :
MAINTENANCE SCHEDULE
Equipment Serial No.
DATE ACTION DATE SIGNED REMARKS

CARRIED
OUT
MAINTAIN EQUIPMENT
There are four things to consider in maintaining equipment:
Inspection.
Servicing.
Repairs.
Own or contract operations.
INSPECTION
The purpose of inspection is to establish the condition of components, and is usually carried out at
regular intervals of time and/or distance used.
The components that require inspection are defined by the maintenance plan.
Repairs that are required can be undertaken at the next service or, as dictated by the identified fault.
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SERVICING
Servicing is also a routine activity e.g. oil changes, lubrication, oil filter changes (on diesel engine lift
trucks), etc. Truck manufacturers usually provide a suggested schedule.
REPAIRS
Repairs can be categorised as planned or breakdown. The former covers those identified by
inspections, the latter covers failures during work.
Planned repairs enable efficient scheduling and minimising down time.
Breakdowns affect work patterns and can be a major disruption, especially when spare parts
availability can influence the repair.
For the more specialised piece of equipment, breakdowns can be a major operational headache;
hence planned repairs are more important.
OWN OR CONTRACT OUT
It is often the case that inspections and routine servicing are undertaken by operating staff, with
major repairs undertaken by makers/dealers.
Alternatively, maintenance can be contracted out to dealers or specific lift truck hire companies.
The ‘own or contract out’ decision involves considering finance, operational aspects and supplier
aspects i.e. the ease with which the contractor can be managed. Typically, contractor performance
is specified and controlled through a contract which will specify the cost and service level e.g. turn-
around time for equipment maintenance.
MAINTAIN BUILDING
Regular inspection and maintenance of the warehouse building will help to prevent damage to the
goods stored and reduce the risks of accidents.
The roof and walls should be checked for leaks or damage and repairs made quickly.
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Door locks should be checked for security and any fire exits should open easily from the outside.
Fire extinguishers and smoke detectors should be regularly checked and fire drills should be
informed to all staff. Local legislation and insurance requirements often dictate this area.
Replace any broken light bulbs quickly to avoid accidents.
The goods should be checked regularly for signs of pest damage and prompt action taken.
A simple way to ensure that the building is checked regularly is to keep a site diary and enter dates
in advance when building inspections should take place. Make someone responsible for the
inspections and signing the diary pages to confirm that the inspections have taken place. Space may
also be left to make notes about any items that may require special attention in the future e.g.
deterioration of a concrete floor or wearing of locks.
COMPLETE MAINTENANCE RECORDS
Records are needed to indicate the following information :
Maintenance tasks in priority order.

Schedule of the tasks (time).
Resources used (people and equipment).
Monitor the quality of work done.
Cost of work done (labour, materials, equipment).
For each individual piece of equipment, the data to record should include :
Equipment description, capacity etc. with manufacturer's references and drawing numbers.
Driver defect reports.
Type and frequency of inspections.
Type and frequency of servicing.
History of all work carried out. For each task this should include :
o Planned date/nature of fault/work done/reason for work.

o Scheduled breakdown/date completed/hours taken/materials used/hours downtime.
o Analysis of this data will show trends in failure rates, high cost areas, changes in
inspection, servicing frequency and areas of excess maintenance.
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MODULE 8 : MANAGING INVENTORY LEVELS
In the first module we stated that the role of inventory management is to ensure that stock is
available to meet the needs of the beneficiaries.
Inventory represents a large cost to the humanitarian supply chain. This is made up of the cost of
the inventory itself, plus the cost of transporting the goods and keeping the goods in warehouses.
Therefore, the inventory managers’ job is to make inventory available at the lowest possible cost.
In order to achieve this, the inventory manager must achieve a balance between supply and
demand.
In this module we will look at the following items :
Types of Inventory.
Stock Time Curve.
Using Forecasts.
Push and Pull Inventory Policies.
Ordering Systems.
TYPES OF INVENTORY
There are three types of inventory and they exist in the warehouse for different purposes. The three
types of inventory are known as:
Working stock.
Safety stock.
Anticipation or emergency stock.
WORKING STOCK
The purpose of working stock is to meet the normal or expected demand for humanitarian goods
between deliveries from suppliers. Therefore, the amount of working stock required depends on the
level of demand and the order frequency.
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SAFETY STOCK
The purpose of safety stock is to manage the risk of stock-outs in the period between deliveries from
suppliers.
Stock-outs can occur for two reasons :
The actual demand level is higher than the expected level (the forecast).
The supplier lead time to supply new stock is longer than expected.
The purpose of safety stock is to protect us from either or both of these things happening in order to
manage the risk of stock-outs.
Therefore, the amount of safety stock required depends on three factors :
The unpredictability of demand.

The reliability of suppliers.
The level of risk of stock-outs that the organisation is willing to take.
The simplest way of defining the amount of safety stock is by weeks or months of normal demand
e.g. 2 weeks stock or 3 months stock.
ANTICIPATION OR EMERGENCY STOCK
Anticipation stocks are built up to meet a sudden increase in demand. The most usual example of
this would be the occurrence of a humanitarian event. In such a situation, speed of response is
important and in most cases, the humanitarian need does not allow time for stocks to be purchased
before being distributed to the places where it is needed. The amount of anticipation stock held is a
policy decision made by the humanitarian organisation.
STOCK TIME CURVE
The stock time curve is a useful tool for understanding how inventory management works and the
purpose of the working stock and safety stock – anticipation stock is not shown as this is reserved
for special purposes and is not included in routine inventory management.
The graph shows how the cycle stock is depleted at a rate which depends on the rate of demand.
The higher the rate of demand, the more steeply the curve falls.
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Working stock Rate of demand
Level of Higher Lower
stock
Safety stock
Time
Level Cycle stock

of stock
Safety stock
Time
The vertical lines represent the arrival of new stock from suppliers.
When demand is at the expected rate, we receive new stock just as the cycle stock is used up. In
this case, no safety stock is required (see diagram below).
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Level of
stock
Safety stock
Time
If demand is greater than expected then all the cycle stock is used up and some of the safety stock
too. The safety stock is protecting us from the higher than expected rate of demand (see diagram
below).
Level of
stock
Time
If the supplier lead time is longer than expected then again, all the cycle stock is used up and some
of the safety stock too. The safety stock is protecting us from the unreliability of the supplier (see
diagram below).
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Level of
stock
Time
If demand is lower than expected and/or the supplier delivers early, then some of the working stock
is left over when we receive new stock from the supplier (see diagram below).
Level of
stock
Time
Demand is sometimes above the expected level and sometimes below. Suppliers will sometimes
deliver late and sometimes early. Therefore, the amount of cycle stock and safety stock remains the
same on average over time. When this is the case, supply and demand are in balance.
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USING FORECASTS
Inventory managers must use forecasts of demand when placing orders for new stock in order to
decide how much to order.
The time horizon of the forecast must be linked to the supplier lead time. For example, if the supplier
lead time is 3 months, then a forecast of demand 3 months or more into the future will be required in
order to decide how much to order.
There are three sources of forecast information that the inventory manager may use :
Long Term Forecasts/Stockpiling strategy.

Initial Assessment Reports.
Short Term Forecasts/On-going operation.
LONG TERM FORECASTS/STOCKPILING STRATEGY
In seeking to develop a stockpiling strategy, each and every organisation is trying its utmost to be as
efficient as possible. One of the main factors of efficiency is to be able to send, the right goods at the
right time. As we have seen earlier, many operations are unpredictable in terms of size and location.
So it is difficult to be fully prepared everywhere, at anytime.
A way to improve the speed of the response is to be able to obtain the needed goods as soon as
possible, at least to initiate the response. For that, many humanitarian organisations have put in
place a stockpiling strategy that provides access to these goods.
A stockpiling strategy not only holds stocks all around the world, but provides quick access to the
goods. For example, agreements have been made with suppliers (after a clear and fair bidding
process) to have stocks available in the supplier warehouse ready to be shipped.
Organisations may need to still have their own stocks.
One approach is to have a global warehouse, which allows a better quality control of the products, a
quick response and a better follow up. It also has a significant cost. These warehouses are used for
emergency, but also for on-going operations. The level of stocks needed is determined by annual
consumptions and buffers for emergency. Products in stock are defined by the operational needs.
Usually, they are the most used items in emergency for different types of programs.
Regional warehouses are more likely to be used to hold emergency stocks. The types of products
stored are well known by organisations. The limiting factors are the cost of maintaining such stocks
and the ability to rotate products that have a shelf life. Many organisations try to avoid keeping
emergency stocks of products with a shelf life, such as food or pharmaceuticals.
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The criteria for the locations of these regional warehouses are:
Close to existing and/or potential operational areas

Good transport links to and from that location (availability and cost)
Acceptance and support from local authorities
An example of such stocks could be to have basic equipment for housing 20,000 people, meaning:
4000 tents
8000 tarpaulins
4000 kitchen sets
4000 jerry cans
Typically, the cost of the inventory for these products is about 800,000 USD.
INITIAL ASSESSMENT REPORTS
Initial assessment reports are made by the first people on the ground at the scene of a humanitarian
event. Such reports contain information on the number of people involved in the event and their
short term needs. This allows the inventory manager to make supply decisions in order to meet the
humanitarian demand.
Initial assessment reports are used to make decisions on the replenishment of emergency stock and
can impact the levels of cycle stock and safety stock, depending on the nature of the event and the
policy of the organisation.
SHORT TERM FORECASTS/ON-GOING OPERATION
Short term forecasts are forecasts made of demand resulting from an ongoing operation. Short term
forecasts are used to make decisions on the replenishment of cycle stock and safety stock.
When the program is up and running, it is necessary to have regular supplies. The demand is
received from the field (Inventory manager/ Program manager) according to consumption and new
needs.
Examples of this are:
Hospital: When an organisation is running a hospital, the organisation is in charge of the

pharmacy of the hospital. Replenishment is done according to consumption and lead time.
Reordering is sent from the field operation (Inventory manager/program).
Refugees or IDPs need to receive hygiene parcels. The reordering is done by the field
operation according to the number of people (which can change), the distribution cycle and
the lead time.
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PUSH AND PULL INVENTORY POLICIES
There are two different types of inventory policy – push and pull.
PUSH INVENTORY POLICY
A Push inventory policy is one where inventory is ‘pushed’ into the supply chain from the supply side
i.e. from the headquarters of the humanitarian organisation out to the warehouses in the field.
A push policy is typically used at the start of a humanitarian event when the need is great but
uncertain and when there is often a shortage of goods. In this situation, all available goods are often
pushed directly to the places where they are needed, without being stored for any significant amount
of time.
The amount of inventory that is pushed into the supply chain is driven by the initial assessment
reports of humanitarian events or by the availability of the goods, whichever is the smaller.
PULL INVENTORY POLICY
A Pull policy is one where inventory is ‘pulled’ through the supply chain from the demand side i.e.
from the operatives in the field. This policy is used when there is a relatively stable and known
demand situation. The amount of inventory that is pulled through the supply chain in this situation is
therefore more driven by real demand from beneficiaries. In this situation, supply and demand are
relatively more in balance and stocks are held in order to meet this level of demand.
ORDERING SYSTEMS
Placing an order to replenish stock is a major decision - although a routine one - in all inventory
management systems. Placing an order involves making two decisions.
The first one requires us to think about the time that we need to place an order. This will require us
to think about how long it will take to receive goods once we have ordered them and during this time
how much will be required.
The second decision, once we have decided when to order, involves determining the size of the
order quantity.
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There are three different systems available to make these decisions :
2 Bin System.
Periodic Review System.
Continuous Review System.
All three of these systems operate on the basis of comparing what is called the Free Stock Level
with a calculated point. The calculation of free stock is as follows :
FREE STOCK
Free Stock is the amount of stock available for use. Physical Stock in the warehouse is not the same
as 'free stock'.
Free stock level is calculated as follows :
physical stock on hand

+
stock on order from suppliers
+
stock in transit
-
stock allocated to consignments
-
stock reserved for special purposes
2 BIN SYSTEM
This is a simple ordering system typically used for replenishing low value items. These could include
stationery, box cutters, cleaning materials, etc.
The stock is kept in two separate bins or locations in a storage cupboard, for example. When the
main stock is used up, a replenishment order is placed. Stock from the second bin or location is
used during the replenishment lead time.
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PERIODIC REVIEW SYSTEM
In the Periodic Review System, the amount of free stock is checked at regular intervals e.g. weekly
or monthly. In between these times, the stock situation is not checked.
The review period is usually determined arbitrarily. However, for high usage rate items or items that
are relatively important for some reason, it might be sensible to review these items more frequently.
In this system, orders are placed at predetermined times. This has the following advantages:
Ordering activities can be planned into the work schedule, allowing better use of staff.
Transportation of the goods can be coordinated to maximise utilisation of the transport

capacity.
There are two versions of the Periodic Review system :
The ‘Top-up’ system.

The ‘Minimum Stock’ system.
TOP-UP SYSTEM
The Top-Up system is best used when the usage rate of the items is high compared to the order
quantities, which means that orders will need to be placed at every review period.
In the Top-Up system, a Maximum Stock Level is defined. At the review point, the order quantity is
calculated by subtracting the Free Stock from the Maximum Stock Level.
The diagram below illustrates the Periodic Review Top-Up System :
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Notice that the order quantity (Q) can vary each time an order is placed.
Calculating the Maximum Stock Level
The Maximum Stock Level is calculated by adding the average amount of stock, which is used
during the review period, plus the lead time to the safety stock level i.e.
Maximum Stock Level = Safety Stock + Average Demand x (Review Period + Lead Time)
Example :
Review Period = 4 weeks

Lead time = 2 weeks
Average demand = 200 per week
Safety stock = 2 weeks stock = 400 units
Therefore :
Maximum Stock Level = Safety Stock + Average Demand x (Review Period + Lead Time)
= 400 + 200 x (4 + 2)
= 400 + 200 x 6
= 400 + 1200
= 1600 units
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THE MINIMUM STOCK SYSTEM
The Minimum Stock system is best used when the usage rate is low compared to the order
quantities, which means that orders will not be placed at every review period.
In the Minimum Stock system, a Minimum Stock Level is defined. At the review point, the free stock
level is compared with the Minimum Stock Level.
If the Free Stock is less than the Minimum Stock level, an order is placed.
If the Free Stock is more than the Minimum Stock level, no further action is taken.
The diagram below illustrates the Periodic Review Minimum Stock system :
Free Stock Minimum Stock Level

Level
Safety stock
Time
Review Periods
Calculating the Minimum Stock Level
The Minimum Stock Level is calculated in the same way as the maximum stock calculation in the
Top-Up system i.e.
Minimum Stock Level = Safety Stock + Average Demand x (Review Period + Lead Time)
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Example :
Review Period = 4 weeks

Lead time = 2 weeks
Therefore :
Minimum Stock Level = Safety Stock + Average Demand x (Review Period + Lead Time)
= 40 + 20 x (4 + 2)
= 40 + 20 x 6
= 40 + 120
= 160 units
CONTINUOUS REVIEW SYSTEM
In the Continuous Review System, the amount of free stock is checked every time stock is allocated
to a consignment. In practice, the routine may be to check the free stock on a daily basis.
The free stock level is compared with a Minimum Stock Level; often call the Re-Order Point (ROP).
If the free stock is less than the ROP, an order is placed. In this system, the order quantity is always
the same.
If the free stock is more than the ROP, no further action is taken until the next time that stock is
allocated.
The Continuous Review System is most suitable for the highest usage rate items and it has the
following advantages:
The ordering process is simplified because the order quantity is fixed.
Compared to the Periodic Review system, less stock is required. This is because the free
stock is checked more frequently so that the stock level more closely matches the demand
pattern.
The diagram below illustrates the Continuous Review System:
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Re-Order Point
Free Stock
Level
Q
LT
Q LT = Lead time
LT
Safety stock
Time
A feature of this system is that the frequency of orders automatically varies, depending on the usage
rate. If usage increases, orders will be placed more frequently, and vice versa.
CALCULATING THE RE-ORDER POINT
The Re-Order Point is calculated by adding the average amount of stock, which is used during the
lead time, to the Safety Stock level i.e.
Re-Order Point = Safety Stock + Average Demand x Lead Time
Example :
Lead time = 2 weeks

Therefore :
Re-Order Point = Safety Stock + Average Demand x Lead Time
= 2000 + 2000 x 2
= 2000 + 4000
= 6000 units
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MODULE 9 : STOCK CONTROL AND MOVEMENTS
The warehouse/inventory manager is responsible for monitoring the movement of goods as they are
transported from the supplier and for the control of stock movement in the warehouse facility.
MONITORING GOODS IN TRANSIT
There are two important areas for the inventory manager to understand :
The order lead time.

Tracking orders for goods.
ORDER LEAD TIME
The order lead time is the time between placing an order and the goods being available for use.
Therefore, the total time is made up of a number of components :
The time to create and process the order in the organisation.
The time to send the order to the supplier.
The time for the supplier to process the order.
The time for the supplier to get the goods ready for shipment.
The shipping time, including any time for customs clearance.
The time for the goods to be received at the warehouse, recorded and put away, ready for
use.
The correct definition of lead time is important for the inventory manager to know and understand
because it determines the timing of replenishment orders. The supplier may quote a ‘lead time’ but
often, the supplier does not take all these steps into account.
Given the possible complexity involved in supply lead time, it is not surprising that lead times may
vary from delivery to delivery. The degree of variation will mostly depend on the supplier reliability
and to some extent, variations in the transportation time.
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If the degree of lead time variation is small (say plus or minus a few days), safety stock can be built
into the stock plan to protect against late delivery compared to the expected date. For example, if
the lead time is 1 month but deliveries can sometimes be up to 3 days late, an extra 3 days supply
can be built into the safety stock.
If the lead time variation is large, it is better to assume the worst case lead time and order earlier.
This is because large amounts of safety stock will be required to protect against late deliveries.
TRACKING ORDERS FOR GOODS
From the time of placing an order, the status of the goods delivery should be monitored for two
important reasons :
The stock on order must be included in the free stock calculation as part of replenishment
decisions.
Should something go wrong in the order processing or in the transportation, the inventory
manager may need to initiate actions in order to expedite the order. Common problems
range from shortages at the supplier to blockages at customs clearance.
CONTROLLING STOCK MOVEMENTS
The control of stock movements covers :
Goods receipt quality inspection.

Physical stock control.
Control of specialised items.
Releasing stock from storage.
GOODS RECEIPT QUALITY INSPECTION
Before goods can be entered into stock, it is normal practice to undertake a quality inspection. The
inspection should be of two parts:
Ensure that the correct goods have been received in the correct quantity. This is normally carried out
by checking the packing list with the purchase order and finally, confirming that the goods received
corresponds to what was ordered. Any discrepancy should be recorded and reported.
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Ensure that the goods are in good condition. The method of doing this will depend on the goods. In
general, check the packaging for any damage which might render the goods unusable. For
foodstuffs, look for signs of insects or foreign matter. For medicines and drugs, check that the
internal (also known as ‘primary’) packaging seal is not broken. Most humanitarian organisations
have specific quality check requirements for items such as these – it is the warehouse managers’
job to ensure that these requirements are followed.
Any goods that fail the quality inspection should be placed in a special holding area and should not
be booked into stock. A decision must then be taken as to the appropriate course of action, which
may include return to the supplier and disposal. This decision and the action should be taken as
soon as possible to avoid congestion in the goods receipt area.
PHYSICAL STOCK CONTROL IN THE WAREHOUSE
The warehouse/inventory manager is responsible for the physical control of stock in the warehouse.
This activity depends on accurate and timely information on the physical location and status of the
stock.
STOCK ROTATION
To avoid accumulation of obsolete stock and expiry of perishable items, stocks should be rotated as
frequently as possible. This means that stock levels should be managed at the lowest level possible,
consistent with providing the level of stock availability that the organisation requires i.e. managing
the frequency of stock-outs.
In addition to this, stocks should be stored and issued on a FEFO (First Expired First Out) or FIFO
(First In First Out) basis according to the following guidelines:
The FEFO system is used for all goods with an expiry date. This is because sometimes, newly
arrived stock has an earlier expiry date than previously received batches of the same item. If a
FEFO system is used, this stock should be ‘promoted’ so that it is issued before later expiring stock.
This is particularly important for medical items.
The FIFO rule ensures stock rotation and prevents expiry by assuming that newer stock always has
a later expiry date than older stock.
The stock control system must record and follow-up the expiry date and the date of receipt. A
spreadsheet with expiry dates as a column can easily be sorted by date on a regular basis in order
to check expiry dates against the current date. The inventory manager can then ensure that items
with a short life can be ‘promoted’ in order to minimise stocks from expiring in the warehouse.
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Stocks should be stored in such a way that earliest expiring or first delivered items are picked and
issued first.
Stock nearing its expiry date at goods receipt should not be accepted unless it can be used before
that date.
Stocks that have passed their expiry date must normally be destroyed.
It is the warehouse/inventory manager’s responsibility to manage and report the amount of expired
stock.
DEAD STOCK
Dead stock is defined as stock that has not rotated over a significant period of time, often defined as
12 to 18 months. To monitor this situation, the stock control system must record the dates on which
stock is issued. As above, if this information is recorded in a spreadsheet, it is a simple task to sort
by issue date in order to identify dead stock items.
Provided that a check is made to confirm that there is no foreseeable requirement for the stock, it is
good practice to remove dead stock from the warehouse by donating, transferring, selling or
destroying it in order to free up space in the warehouse for active stock.
It is the warehouse/inventory manager’s responsibility to manage and report the amount of dead
stock.
CONTROLLING SPECIALISED ITEMS
Some types of goods require special storage and handling. The main types are medicines and
combustible materials.
MEDICINES
Because of their particular sensitivity, the storage of medicines and medical materials requires
special attention and care and sometimes, security. Environmental factors such as temperature,
humidity, air and light are all factors that influence the storage of medicines.
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Environmental Conditions
Temperatures reached in vehicles, containers and railway cars during transport may be very high.
This may mean that medicines loose their effectiveness or that the original expiry date cannot be
guaranteed. Therefore heat sensitive medicines require special conditions for transportation and
storage.
Cold Storage
The effectiveness and shelf life of vaccines, sera, test kits and many other types of items depend on
being kept in a temperature controlled environment from the point of manufacture to the point of
administration. Some items are sensitive to both high and low temperatures. In all cases, the
manufacturer’s information should be checked.
To ensure the consistency of temperature storage, power supplies for refrigerators should be
backed up with standby generators, in case of a power failure. Max/min thermometers should be
used to monitor the temperature and these should be checked regularly.
Secure Storage
Narcotics and other substances are controlled under the provision of the International Conventions,
in particular the Vienna Conventions of 1988 or under the local national laws. These laws dictate
that these substances should be kept in a secure room or a safe.
Entry to the secure storage should be controlled by restricting the number of people authorised to
hold keys and enter the store.
In most countries, there is a legal obligation to keep a ledger which records the movements of
controlled substances into and out of the store, the destinations, the date of the movement and the
names and signatures of the authorised people. Any local requirements should be checked and
adhered to.
INFLAMMABLE AND DANGEROUS GOODS
Ideally, flammable goods should be stored in separate buildings, to reduce the risk of fire spreading
to the main storage area. The flammable store should be well ventilated, fireproof and equipped with
fire fighting equipment such as extinguishers, hoses, sand etc.
Substances like pesticides and fertilisers must not be stored together in the same place. In case of a
leak, these substances may create an explosion, extremely corrosive gas or toxic fumes. The
packaging will normally give recommendations for storage and these should always be followed.
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RELEASING STOCK FROM STORAGE AND GOODS DESPATCH
The most common cause of inaccurate stock records is the unauthorised removal of goods from
stock.
In general, a formal authorisation system should be in place which controls the release of goods
from stock and from goods despatch. The basis for such a system is as follows :
A limited number of people should have the authority to release goods.
The release of goods should be confirmed by a signature or stamp on a document or an

electronic authorisation in the case of a computer based system.
The authorisation of goods release should also trigger an update of the stock records.
121
MODULE 10 : STOCK RECORDS
The warehouse/inventory manager is responsible for keeping accurate records of stock and stock
movements. This allows reports to be created which show the effectiveness of the stock control
activities and provides visibility for management and donors of the warehouse and inventory
management process.
Stock records can be paper based, computer based or a mixture. The principles discussed here
apply, no matter how the stock record system is implemented.
The principles of any stock record system are as follows :
Each item stored has a unique identification number assigned to it.
The core document that allows visibility of stock levels and movement is the Stock Card.
A Bin Card is the document that relates to a specific batch of an item in stock.
Stock checks are the method to reconcile the stock records with the physical stock in the
warehouse.
Most organisations require regular reporting of stock levels and movements.
In addressing these items six things need to be considered :
Stock identification.
Stock cards.
Bin cards.
Stock checks.
Stock loss
Reporting of stock levels.
STOCK IDENTIFICATION
The unique identification (ID) number assigned to each item usually follows a prescribed format
which is defined by the organisation. A record of the ID numbers assigned is kept, along with certain
other details about the item. These details will normally include the following :
122
Item name.
The cost of the item.
A description of the item.
Details of the supplier.
The quantity contained in each pack.
The packaging method.
The above is not a comprehensive list as the detail required will be dependent on the nature of the
product and the stock record system in use.
STOCK CARDS
Every item held in stock has a stock card associated with it.
The stock card may be a physical paper record or a file in a computer system and is administered by
the inventory manager.
The stock card will typically contain the following information :
Item ID and description.

Pack quantity.
Storage location in the bulk storage area.
Inventory control information e.g. Re-order level or maximum stock level.
In addition to this information, the stock card will record each movement of the item into and out of
stock plus the current stock balance.
For movements into stock, the source of the stock will be recorded by referencing a purchase order
number and/or the name of the supplier.
For movements out of stock, the destination will be referenced by a number which identifies the
consignment and/or the destination location.
In each case, the date and the quantity of the movement are recorded.
For time sensitive material e.g. medicines, the batch number and the expiry date may also be
recorded to aid stock rotation.
123
The diagram below shows an example of a stock card :
STOCK CARD
DATE ITEM INFORMATION

Item Code Stock Max. Stock Min.
Storage Location Description Pack Quantity
DATE Document Sender/ PO Expiry Batch In Out Balance

Ref. Destination Number Date No.
BIN CARDS
A Bin Card is the most specific document related to one batch of an item in stock. It is the ID card of
a specific batch of an item and a new one is created for each new purchase order, batch or new
expiry date of an item.
Bin cards are placed physically next to the item in the storage area so that the identity of the item
can be read in the storage area.
Bin cards are required for all items that must be rotated on a first in, first out basis and for items with
expiry dates. Items that do not require rotation do not require a bin card.
The diagram below shows an example of a Bin Card :
124
BIN CARD
Purchase Order No. ITEM INFORMATION
Item Code Batch/Serial No. Expiry Date
Storage Location Description Pack Quantity
Quantity (in unit of measure) Storekeeper

DATE Stock Requisition/Ref. In (+) Out (+) Balance Initials Signature
No. (=)
The column ‘IN’ is used to record increases in stock. This happens when goods are received from
suppliers against a Purchase Order. More than one row will be used when part orders are received
e.g. 100 units are ordered, 50 units are received in one week and 50 units the following week.
The column ‘OUT’ is used to record decreases in stock against a Stock Requisition number.
Decreases in stock will occur until there is zero balance of this batch of item. When this happens,
the Bin Card is removed from the storage location and is normally kept in an archive file.
STOCK CHECKS
Stock checks involve the physical counting of the stock in the warehouse. The purpose of a stock
check is to reconcile the balance in the stock records with the physical stock present in the
warehouse.
The reasons why an accurate stock balance is required in the stock records are as follows :
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Stock replenishment decisions are taken based on the free stock, some of which is
represented by stock on hand. If the records are inaccurate, this could lead to either too
much stock (wasted money) or not enough stock to meet beneficiaries’ needs.
The activities related to investigating discrepancies in the records do not contribute to the
objective of the warehouse operation (making stock available for delivery to beneficiaries)
and is therefore wasted resource.
The organisation has an obligation to donors to ensure that goods are delivered to the
beneficiaries specified and that a minimum of wastage occurs in the supply chain. The
demonstration of this depends on accurate records.
There are a number of possible reasons for a discrepancy between the physical stock count and the
balance in the stock records :
Stock may be incorrectly labelled or identified, indicating inadequate inspection in goods

receipt. This can lead to a negative discrepancy for one item but a positive discrepancy for
another.
Stock may be stored in the wrong location in the bulk storage area and as a result is ‘lost’
from the stock management point of view because it is not available for issue.
Stock may be incorrectly stored in the location, perhaps placed behind other items or
dropped behind shelving. This is an indication of poor discipline in the storage areas.
The discrepancy may be due to theft. This is more likely to be the case for ‘valuable’ items and may
indicate a need for improved security measures for these items.
A large proportion of discrepancies can be due to human errors in the writing or typing of information
into the stock records. This can indicate a need for better training of staff or a need for the review of
document layouts or computer system functions. In the case of computer based systems, a certain
amount of automatic checking can be built in e.g. checking of item ID numbers against a list of
‘approved’ items.
Whatever the nature of the discrepancy, the source should be checked and prompt corrective action
should be taken.
WHAT AND WHEN TO COUNT
Most organisations require that all stock be checked on a regular basis, perhaps yearly. But some
stock should be checked more frequently than this.
Items that are despatched frequently have a larger number of transactions recorded, which leads to
a higher chance of errors.
126
High value items are more at risk of theft.
For organisations with a large number of items in store, it may not be possible to count all the stock
in a single exercise. In this case, the stock should be divided into stock-checking groups so that
each group can be checked in rotation. For example, the stock may be divided into 12 groups and
each group assigned a month of the year for an annual stock check.
Most organisations have a specific policy on stock checking. The inventory manager is responsible
for implementing this policy.
DEALING WITH DISCREPANCIES
In the case of discrepancies between stock records and physical stock, the following actions should
be taken :
Record the discrepancy.

Report the discrepancy.
Investigate the reason.
Take action to avoid further discrepancies in the future.
STOCK LOSS
Stock may be lost for reasons other than those listed above :
Goods may be damaged whilst being handled or stored in the warehouse.
If bulk items are to be packaged then some of the items may be damaged or lost during the
repackaging process e.g. bagging of bulk grain.
In either case, the loss must be recorded in the appropriate way.
REPORTING STOCK LEVELS
Most organisations require regular reporting on the stock management status. This will normally
include the following information :
Stock on hand in the warehouse.

Stock on order.
127
Average stock during the period.
Quantities received and despatched over the last period.
Changes in the stock on hand over the last reporting period.
Discrepancies in the stock records.
Stock that has been become obsolete during the last period.
The expiry status of remaining stock and an estimate of any stock that will expire during the
next period.
In addition to this, a number of ratios may be calculated from this information which gives an
indication of the performance of the warehouse/inventory management process, as follows :
Stock record inaccuracy = [(total quantity on hand) – (total quantity recorded)] / (total quantity on
hand) %
Stock expiry or loss rate = (quantity expired or lost) / (total quantity) %
Both stock record inaccuracy and stock expiry rate should be zero. Anything above this needs to
investigated and the reasons found. This will then enable improvements to be made.
The diagram below shows an example of a stock report :
STOCK REPORT PERIOD
WAREHOUSE MANAGER
Item Description Opening In Out Closing Count Diff. Remarks

No. stock stock
128

Warehousing and Inventory

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WAREHOUSING

Copyright 2006 © Fritz Institute. All Rights Reserved.

All rights reserved. No part of this publication may be reproduced or

transmitted in any form or by any means electronic or mechanical, including

photocopying, recording, or by any information storage and retrieval system,

without permission in writing from the Fritz Institute.

Copyright 2006 © Fritz Institute. All Rights Reserved.

UNIT AIMS AND STRUCTURE

This unit is designed to help you develop an understanding of :

The function of warehouse and inventory management.

This unit has been structured into ten modules :

Module 1 : The Function of Warehouse and Inventory Management.

Copyright 2006 © Fritz Institute. All Rights Reserved.

The Functions of Warehouse 19

Procedures and Policies 22

Understanding the Product 24

Taking Account of Local 30

Selecting a Suitable Location 30

Leasing Temporary Warehouses 35

MODULE 3 Planning Work Phases 37

Selecting Storage Equipment 45

Defining Work Methods 48

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Sizing the Goods Receipt Area 61

Sizing the Goods Despatch Area 62

Sizing the Picking Area 63

Warehouse Flow and Layout 63

Goods Location in the Bulk 65

MODULE 5 Work Cycles 69

Example - Estimating Resources 70

Defining the Control 93

Copyright 2006 © Fritz Institute. All Rights Reserved.

Maintain Building 100

Complete Maintenance Records 101

MODULE 8 Types of Inventory 102

Stock Time Curve 103

Using Forecasts 107

Push and Pull Inventory Policies 109

Ordering Systems 109

MODULE 9 Monitoring Goods in Transit 116

Controlling Stock Movements 117

MODULE 10 Stock Identification 122

Stock Cards 123

Bin Cards 124

Stock Checks 125

Stock Loss 127

Reporting Stock Levels 127

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Warehouses and inventory in humanitarian supply chains.

WAREHOUSES AND INVENTORY IN HUMANITARIAN SUPPLY CHAINS

Copyright 2006 © Fritz Institute. All Rights Reserved.

WHY DO WE NEED WAREHOUSES?

Let’s look at each in turn.

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FOR DIVIDING BULK DELIVERIES

FOR COMBINING DIFFERENT GOODS

TO PROVIDE A SPEEDY RESPONSE

FOR PROTECTING INVENTORY

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To decouple supply and demand.

TO DECOUPLE SUPPLY AND DEMAND

We know exactly in advance what humanitarian goods will be required.

Suppliers deliver exactly when we need it and in full.

IN ANTICIPATION OF AN INCREASE IN DEMAND