Student Handouts Prof.

Henry, ISG

Supply Chain Management

Warehouse Management

28 March 2022

Prof. Henry

Learning Objectives
• Define the role of warehousing in contemporary
global supply chains.
• Explain how material movements are planned and
controlled.
• Explain material handling processes within
warehouses and distribution centres.
• Offer insights into how warehouses are managed and
how work is organized.

Warehouses in the Supply Chain

Warehouses provide a centralized location that stores
and organizes inventories before distribution
– often called distribution centers
– JIT and lean manufacturing can locate
warehouses near the manufacturing
facility for frequent deliveries
– can be utilized to create product
assortments
– https://www.ft.com/content/ea6960b0-
f163-41aa-99ff-b25e38ae6fb1

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Three Main Approaches

• Stock keeping unit (SKU) storage—All of a given type of product are
stored together. This is an efficient and way to store products.
• Job lot storage—All the different products related to the needs of a
certain type of customer or related to the needs of a particular job are
stored together. This allows for an efficient picking and packing operation
but usually requires more storage space than the traditional SKU storage
approach.
• Crossdocking—This is a process where trucks from suppliers arrive and
unload large quantities of different products. These large lots are then
broken down into smaller lots. Smaller lots of different products are
recombined according to the needs of the day and quickly loaded onto
outbound trucks that deliver the products to their final destinations

Big Box Stores

Big Box: Economies of Scale

• The “big box” store format allows Walmart to
combine a store and a warehouse in a single
facility and get economies of scale. The big
box is big enough to hold large amounts of
inventory like a warehouse. And since this
inventory is being held at the same location
where the customer buys it, there is no delay
or cost that would otherwise be associated
with moving products from warehouse to
store. Savings are passed along to the
customer.
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Amazon Big Box Workers

“Treated like Robots”

Complex Logistics Channel

Distribution Structures

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Role of Warehouse

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Facility Location

Factors to consider when locating warehouses and

distribution centers:
– proximity to customers or manufacturing facilities

– availability of infrastructure and access to

transportation

– cost and availability of labor

– overall business climate including tax structure

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Selection Criteria for

Warehouse Location

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Factor Rating

• Factor Rating is a popular quantitative

technique to help determine warehouse
and distribution center location

• Evaluates multiple location alternatives

based on selected factors

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Factor Rating Steps

1. Identify key decision factors
2. Assign weights to each factor based on its
importance (sum=100)
3. Establish a scale to evaluate each location
relative to each factor
4. Evaluate each location based on factors
5. Multiply factor weight by score for that
factor and sum results for each location
6. Select location with highest score
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Factor Rating Example

Urban Apparel has identified six factors it considers

important in determining the location of its
distribution center. There are two potential locations
that have been evaluated for all six factors on a five-
point scale (1 = poor to 5 = excellent). Factor weights
have been assigned to the six factors.

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Traditional Warehouse Tasks

Creating bulk consignments
Breaking bulk consignments
Combining freight
Smoothing supply to meet demand
Warehousing should aim to provide value-
adding services as well as minimizing
operating costs
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Generic Warehouse Functions

• All activities within a warehouse are associated with
one of the following core functions

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Non-traditional Warehouse Tasks

Increasingly warehouses are being used to
perform nontraditional tasks such as:

 repair items
 add labels and price tags
 sequence items in preparation for the
retail floor
 put garments on hangers

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Role of Warehouse Manager

Six Tenets of Warehouse Management
Accuracy
Cost Control
Cleanliness
Efficiency
Safety
Security

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Receiving

Companies have introduced automated unloading

systems, which means a 26-pallet trailer can be
unloaded within five minutes of arriving at the dock. 21

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Receiving

Would this new arrival slow down the receiving

process? What other headaches might it create?
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Order Picking
• Picking solutions vary depending on freight
volume, variety and throughput.
Pick-to-order: Individual order pick or discreet
order pick
Cluster Picking: Sort while picking
Batch picking: Pick products for a number of
orders at the same time.
Zone picking: Pick products from specific zones
Wave picking: Combine and release orders at
specific times during the day.
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Order Picking Strategies

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Order Pick Strategies

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Order Pick Strategies

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Warehouse Pick Area Layout

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Warehouse Grid

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Warehouse Racks

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Cross-Docking
Cross-docking is a popular form of warehouse
sorting that attempts to move products “cross the
dock” from inbound to outbound, without ever
being stored
 arriving larger shipments are broken into
smaller shipments for local delivery
 requires precise timing and coordination
 information technology tracks inventories
 especially used in retail industry
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Cross Docking
Cross-docking - bypasses the storage area in
warehouses and distribution centers.
 reduces cost
 improves customer service
 non-value-adding functions are eliminated
 typically employed for fast moving freight with
constant demand.
 Needs the full support of suppliers as to how to present
the product, including clear labelling and advance notice.

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Picking Equipment

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Forklift Operator

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Touch Screen Computer fixed on Forklift

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Conveyors

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Robotics

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Order Picking Methods

Paper Pick Lists: Will detail order number,
location, product code, description, quantity
Pick by Label: Series of labels on a sheet by
pick order
Pick by Voice: See business case study
Barcode Scanning:
RFID
Pick by light/pick to light
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Wearable Radio Data Terminal with

finger scanner

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Picking with hand-held

barcode scanner

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Pick to Light

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Warehouse Management Systems

A Warehouse Management System (WMS) manages

information processes and material requirements
transmitted from the management information system
such as Enterprise Resource Planning (ERP) to:
Trigger the right work …..

….. at the right time across the operation ….

…. to meet demand.

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Advantages of Quality Information

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What to Look For in a Warehouse

Management System
Ability to interface with other systems such as ERP
systems
Modular and scalable, where you only pay for the
functions you require
Accessible and secure
Ease of operation
Standard system
Supports warehouse best practice
SaaS and Cloud Computing
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GYS Warehouse

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GYS Production and Warehouse

Sites

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Warehouse Layout

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Rail-Connect Warehouse

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Material Handling and

Storage
• Automated material handling improves and
standardizes warehouse performance by
minimizing human intervention

• Storage solutions vary depending on the

volume, variety and throughput of freight in a
warehouse of distribution system.
– Pallet storage
– Non-pallet storage

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Block Stacking

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Double Deep Racking

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Narrow Aisle Racking

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Automated Storage and Retrieval

Systems
• Utilizes fixed path
cranes to collect
pallets at the front
of the racking
system and
transport them to
empty locations
within the racking.

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Work Organization and Job Design

Automation and computerization is reducing
human intervention in the physical handling of
freight, and increasing information interaction
which has implications for job design.
Socio-Technical System Theory (STS) focuses on
the impact of implementing warehouse
technologies on the workforce. Fundamental
principles of STS theory are:
 Joint optimization of the technical and social system
 Quality of work life
 Employee participation in system design
 Semi-autonomous work groups.
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Process Mapping Example

Step # Activity Average Time Required
1 Employee 1 physically places trailer at receiving dock 15 minutes
Employee 2 unloads the trailer with material handling
2 30 minutes
equipment
Employee 3 checks load quantity from the trailer against
3 30 minutes
shipping documents for accuracy
Employee 4 acknowledges receipt of the material on the
4 computer and prints control tickets to move material to 60 minutes
required warehouse locations
5 Employee 5 attaches control tickets to individual loads 20 minutes
6 Employee 6 inspects inbound material 30 minutes
Employee 7 moves material to required warehouse location,
7 30 minutes
freeing up the receipt line for another trailer
Employee 4 files copy of shipping documents and forwards
8 copies to Accounts Payable at the end of the day (no physical 15 minutes
movement required)
Total Average Time to Unload Trailer (excludes Step # 8) 215 minutes
Non-value-adding Value-adding

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Process Mapping Example

• Remove non-value-adding
Step #1
steps
Step #2 • Seek to combine other
steps
Step #3
Step #4
Step #5
Step #6
Step #7

Hour 1 Hour 2 Hour 3 Hour 4

Non-value-adding Value-adding

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Socio-Technical Systems Theory

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