DNAM 4A

Logistics and distribution

“WAREHOUSE ADMINISTRATION”

Teacher’s name:
Claudia Rivera García

Team members:
Gonzalez Salmeron Carlos Alejandro ID: 3249
Macias Garcia Gabriela ID: 3148
Estrada Amador Claudia Daniela ID: 3069
Ramirez Pérez Claudia Itzel ID: 3259
Quiroz López Vanessa ID: 3169
Rivera Moreno Mónica ID: 3218

Delivery date:
February 27th, 2022
• Index
• Introduction

The handling and storage of materials and products is something that raises the cost of the
final product without adding value, which is why the minimum stock should be kept with the
minimum risk of shortages and at the lowest possible cost of operation. The way
warehouses are organized and managed depends on various factors such as size, the
degree of decentralization desired, the variety of products manufactured, the relative
flexibility of equipment and manufacturing facilities. Production scheduling establishes the
parameters that will be key to future warehouse designs. In order to provide an efficient
service, the following functions are common to all types of warehouses:

● Reception of materials
● Register of entries and exits of the warehouse
● material storage
● Material and warehouse maintenance
● Dispatch of materials
● Coordination of the warehouse with the inventory control and accounting
departments

For this assignment, it was decided to use a family business of a member of the team to be
able to develop the topics.

“Tenis Rivera” is a small business dedicated to the sale and distribution of casual and sport
tennis shoes, they are 100% original American tennis shoes from recognized brands,
including Nike. The tennis shoes are bought in the United States and brought to the State of
Aguascalientes to be sold in different establishments within the State.

Currently the headquarters of this business is located in the municipality of Pabellón de

Arteaga in Aguascalientes, a large number of citizens from nearby municipalities come to
this branch to buy shoes. There is another establishment in the municipality of Rincón de
Romos, also in Aguascalientes, although this one is only open on Saturdays and Sundays.

• Warehouse classification applicable

The company selected has a space designed to store the shoes that have been bought from
the United States and are ready to be sold and distributed, they are finished goods
therefore, the warehouse classification applicable to the business is taken according to the
type of material stored which is Finished Products. The warehouse is made up of pallets of
shoes, which are products that no longer need any type of process in order to be sold on the
market. These types of products are only purchased in their final production state and are
sold to Mexico's customers. The pallets of goods arrive at the warehouse and here they are
checked according to the quality and quantity in which they arrive, if these two main
characteristics are not met, the products cannot be sold.
Once the shoes are bought in Texas, they are sent by parcel to Aguascalientes, where they
are collected on pallets and taken to the warehouse. Subsequently, these pallets are opened
and the merchandise is counted, once the quantity and the pairs are registered, it is checked
that they have paper (so the shoes won't break) and they are placed in their boxes
corresponding to the shoe number. They are divided in the warehouse by number for better
control.

• Current layout vs. proposed layout (considering the types of materials stored,
including hazardous)

The current layout allows stored goods to follow a process within the warehouse, this
process begins from the moment the merchandise is received on the pallets until they are
prepared to be sent to the final consumer.

Proposed layout:
From our point of view everything seems to be in the right place, what we mean is that the
design of the warehouse allows the goods to be kept in optimal conditions throughout the
entire handling process.
We recommend that the company check the facilities to prevent the goods from suffering any
type of damage, for example that there are leaks in the roof and damage the boxes in which
the tennis pairs are packed, keep the merchandise at a considerable height in case of
flooding, and even have control of the temperature inside the warehouse.
It is not to our knowledge if there are cleaning products or products of this nature in the
warehouse, but it is important to consider having a space only to store these products, in
order to keep away from the merchandise all substances that may be flammable and
corrosive, since most of these products have these characteristics.

• Describe current inventory control and materials handling

In order to understand the functions of the areas of the warehouse, the activities and steps
we have to break down the work plan.These are the activities to be carried out by the people
of this company:
1. Receiving of the pallets: in this step the merchandise is taken to the warehouse,
the shoes arrive on pallets which are unloaded at the main door of the warehouse.
The merchandise arrives at the Aguascalientes parcel service, and a truck from the
shoe company goes through the pallets and picks them up.
2. Unloading shoes from the delivery truck: the pallets are lowered by the
warehouse employees and are introduced in the same, which are counted and
checked once they enter the warehouse, to verify that they are not broken or
mistreated.
3. Stock unpack: Once the pallets have been reviewed and verified that they are in
perfect condition, the shoes are unpacked for quality and quantity control, here shoe
by shoe is checked to verify that they are not broken and have not been exchanged
for shoes. Mexican, and are 100% authentic from the United States. Once it has
been checked that they are all in good condition and that they are the expected
merchandise, they pass this quality control. Also here it is checked that the complete
merchandise and all the pairs come as they were purchased and the number of pairs
they must be.
4. Classification by pairs: The shoes are put together with their pair, verifying that
they are left and right shoes, to later put them in their boxes with their correct
number. Here they are checked and if necessary a piece of paper is placed inside
them so that they do not break and resist.
5. Pricing: the pairs are marked with their respective prices, a label is put on them to
identify the final price of each pair since each one is different for each model.
6. Moving goods to the bulk storage area: Once the shoes are put in their boxes,
and priced, they are divided by numbers,for instance: the numbers 23´s with the 23's,
and so on (regardless of whether they are different models and colors) and are taken
to the largest storage area where they are organized by numbering for easy handling.
7. Count of available stock: the storage employees carry out a count of the number of
pairs of each pair of sneakers to finally have an inventory of each pair and add it to
the initial one to make a comparison.
8. Hold the stock until needed: pairs of shoes remain in their divisions until a
customer places an order and requests a pair.
9. Order placing: if a customer places an order of a pair of shoes, the sales employee
makes a request to the warehouse personnel to check the availability of the sizing
and model, and if the shoe is available the order is placed and the warehouse
personnel send the pair to the packaging area.
10. Packaging and packing of the goods: Here the pairs of shoes are packed in a
larger bag depending on their size and they are arranged in a neat way so that they
 can be delivered to the customer like that. A business card is also added to the bag
and if the order exceeds the amount of 5 pairs, a small gift is placed.
11. Validation step: here a second quality control is placed, but this time is in order to
check the conditions of the bag and the correct placement of the goods.
12. Shipping or pick up process: the goods are sent to the shipping or pick up area
where the job of the warehouse employees is done, here the administration or the
sales personnel take care of the payment of the goods and the sales of them, and if
necessary they take them to the delivery truck.

Manual Material Handling

Every itemIt is treated with due care to prevent it from breaking, the shoes are not grabbed
with dirty hands to avoid any type of damage or staining, and paper is placed around them to
ensure that they are not damaged by the boxes either.

The shoes are handled manually, the pallets and their classification is manual, everything is
done by the warehouse employees since no machinery is used to carry out any type of
activity. When the pallets arrive, they are lowered into the warehouse by the loaders with
their own body strength, and the tennis shoes are packed and registered by the same
personnel. The division of products into their types is also carried out by the employees and
they are in charge of placing the orders.

• Functions and types of inventory applicable

Functions: Anticipation and Safety Stock

Tenis Rivera is a small company and since the sales aren't as big as the Nike company, they
tend to have two functions for the inventory that are crucial to their productive and sale
activities and they have been like this for years now. They have two main functions for the
inventory, one of them is the Anticipation and the other one is the safety stock. The inventory
of shoes is not only of one model, but when pairs of sneakers are bought, they tend to be
many, the pallets that are acquired are several and exceed the quantity demanded, with the
previous analysis carried out, the company makes safe purchases. An example of this was
when the demand for Air Force 1 ‘77 classic (a model of shoes) had increased, the company
had previously bought many pairs of sneakers like these and without a doubt the price at
which they were sold did not affect what they had in inventory since in the market were more
expensive but their purchases were already assured by the inventory that had been carried
out. Anticipation stock comprises a lot of finished goods before they are low in stock, or run
out of a shoe size, they tend to stock more products to avoid being short of merchandise.

Type of inventory:

The inventory that is stored is of finished products. The shoes are bought when they are
ready to be worn, no type of raw material or other materials are purchased. This facilitates its
restock in the inventory since it is only necessary to buy the same model if it runs out and
thus not have production difficulties. The finished goods are just stored in the warehouse
until they are requested by the clients.
• From the 4 ABC classification examples given in 1.4.3.2., describe which one would
work better for the company and justify your response

As it has been mentioned before, the company sells finished products that need to be easily
transported from where it is located to the delivery space. It also guides us that most of the
space in the warehouse is from this kind of product. However, this might be most of the
revenue of the company.
The more accurate classification for it can be “A”. It has been defined this way because of
the following points:
● The majority of the revenue is from this kind of product
● Moderate orders
● Needs constant cycle counting
● It is not necessary to have a large safety stock
Even though we consider this one as the more accurate, it can be settled A,B, and C as well,
within the company can settle each one to different kind of products (or brands) based on
their demand, revenue, lead time, shelf life, and quantity of storage needed.

• Discuss and describe if cycle counting should be executed or not and why and
which are the conditions Cycle counting is the frequent counting of a part of the total
inventory so that all of it has been counted at least once in a given period of time.

The correct implementation of this type of counting makes it possible to increase the
accuracy of stock records and combat the so-called ghost inventory, which has a positive
impact on productivity, profitability and the level of customer service.
If necessary since this count makes everything more agile since it allows validating and
correcting the existence data
Cycle inventories can:

● Achieve high accuracy

 ● Level the workload
● Reduce inventory and free up working capital
● Continuously measure inventory accuracy
● Run without interruption of operation
● Facilitate process improvement
● Eliminate the Annual General Audit Inventory
In a shoes store, it is necessary to have a control about the products are being sell, they
need to be moving the mercancy too many times, and so they need to have a control about
which products were moved during the day and which ones were sold, it’s considering
necessary to have a control of all the stock products so that they know what they can sold.

Integrating this kind of system, the store can have a wide management of the inventory
avoiding confusion in the organization when selling the product.
• Describe if the company has a purchasing management process or department and
how it works in general terms

The company does have a purchasing management team, and they follow specific steps in
order to buy the best quality and the most profitable items.
➔ When it comes to making purchases so that the inventory is not empty, a review of
the models that have sold the most and those that have not sold as much is carried
out, the pairs of numbers that are in existence are also counted. to see which ones
are going to be supplied.
➔ Once this analysis is complete, the information is taken to the purchasing
department, which evaluates the budget with the finance department and reviews the
prices and discounts that are in the market and if the demand is good to make the
acquisition.
➔ An investigation of the flights to the United States is carried out and they are
scheduled for a certain date so that the people of the department can go to buy the
shoes in person.
➔ Once these members arrive at the stores in the United States, they make their way
through the stores buying the products that are most requested, those that give the
most value to purchases and the most convenient.
➔ This entire process ends when they are taken to the package in Houston, Texas and
left to be sent by pallet to Mexico. Here the shipping cost is paid and the information
is collected once people arrive in Mexico.

But the work of the purchasing department does not end only with reviewing the inventory
and buying what is missing, it seeks to meet a certain number of goals so that this
department can see itself in its proper functioning. Some of the goals as a purchasing
department are:

➢ Make purchases in the most effective and wise way possible, since the quality and
price of the products depend on this.
➢ Do not buy without an idea of ​how the product will be sold as this would affect the
economy of the company.
➢ Look for the best offers of the products as long as they meet the quality desired by
the company.
 ➢ Develop policies that the employees comply with and that the other departments
carry out to ensure the quality of the shoes and that no one can take the main
objectives in another direction.
➢ Always take into account what is best for customers and take into account the
opinions of the market studies that are carried out for the purchase of a new model of
shoes and merchandise.
➢ Reach the best agreements with the suppliers so that the benefits are mutual and
they, as well as the purchasing department, benefit from the fair purchasing activities
between them.
➢ Maintain the correct balance of the quality, originality and guarantee of the product,
as well as its cost to customers and not exceeding a price that is not fair to them.
➢ It is about buying products and goods that do not affect the environment. At the
moment new tennis models have been introduced that are part of a campaign called
"Zero Waste", shoes made from recycled materials from other tennis shoes and are
very light to wear , being economical and eco-friendly.

• Individual Conclusions

Carlos Alejandro Gonzalez Salmeron:

When analyzing the warehouse this is a means to increase the profits of an organization.
Today, we must think in a more comprehensive way, taking into consideration the functions
performed by sales, purchases, inventory control, production and distribution. The
productivity of the warehouses is a totally random factor and depends on the sector, activity
and size of the company, leaving a clear relationship between the resources and means
available with the productivity obtained. Thus, sectors with large volumes of activity and
business, such as logistics operators and pharmaceutical distribution companies, have
higher values ​in productivity thanks to their specialization and allocation of resources, such
as applications of technical improvements and policies of constant evolution and
improvement. The warehouses that contain merchandise must be organized according to a
series of basic principles, in addition to this it entails a daily record of all the entries and exits
of articles, the materials that are handled must be stored according to the shape, size,
nature and her caracteristics. The primary objective of storage logistics is to locate the
merchandise in the best possible way. For this it is necessary to establish a flow of goods
and a series of objectives

● Controlled stock rotation

● Have accessibility to all merchandise by making the least number of transfers
● Maximum use of storage capacity both in height and surface.
● Being able to keep counts and inventories with ease, in addition to knowing the state
in which the products are found.
Gabriela Macias Garcia:

In the past I had heard about the warehouses but I did not know all that it entailed, for me it
was a superficial part. The good management of a warehouse takes an important place
inside the company, this is because from here you can see the quality that the company has.
Each element within the warehouse is essential, knowing where each thing will be placed,
how the merchandise will be handled in the warehouse, knowing what is inside the
warehouse, etc. we can have better control over all this. Although the warehouse can be a
part that is not seen by the consumer, it seeks to optimize all the activities that are
developed within it to have excellence from the beginning of the process of purchasing a
product. It should be noted that every company needs to know how much product its
warehouse has, the inventory allows us to have control of stocks within the warehouse,
customer service begins from here, if proper inventory management is done in the company,
better customer service can be provided; having the necessary amount at the right time and
place is the key.
Finally, something I noticed while doing this is that the company could take into account
using some type of mechanism to handle the merchandise, this could optimize the time in
which the goods are moved, in addition to preventing any situation that threatens the health
of its employees by loading the pallets only with the strength of his body.

Claudia Daniela Estrada Amador:

By definition a warehouse is a large building where raw materials or manufactured goods
may be stored before their export or distribution for sale.
As consumers we don't realize how much is behind the product we buy, the organization
required in the company influences a lot in the service provided and the quality of the
product being offered.

There's A lot of things to consider while placing a product. It has to be in an optimate space
that can ensure it’s in conditions to be sold, where it can be taken when it’s necessary and
that the employees can move freely so that they don't damage the product while it is in
movement.

Of course, moving a product costs time, money and effort, so the product needs to be in a
place where it doesn't move more than necessary. There exist several techniques that help
to organize every kind of product or materials that needs to be in a warehouse. It can be
different for every company, depending on what they buy, the lead time, shelf life, what kind
of goods it is (raw material, parts/components, WIP, finished goods, supplies) and its priority.

In the document below, we’ve analyzed the way a tennis shoes store manages their
products in stock and what they need to consider to have an optimate process to organize
and move their products to make it more agile and costing less.

Claudia Itzel Ramirez Pérez:

The way warehouses are organized and managed depends on several factors, such as size,
degree of decentralization desired, variety of products manufactured, relative flexibility of
equipment, and manufacturing facilities.

To provide an efficient service, the following functions are common to all types of
warehouses:
➔ Reception of materials
➔ Register of entries and exits of the warehouse
➔ material storage
➔ Maintenance of material and warehouse.
➔ Dispatch of materials
➔ Coordination of the warehouse with the inventory control and accounting
departments

These factors are very important since in this way make a product/merchandise flow in an
orderly and effective way to make the process that has to be carried out for a product. From
the moment of purchase, the search where they are kept for later use, ending with the
distribution of the same

The importance of logistics is currently key to the functioning of the economy, both globally
and regionally and locally. In this sense, the globalized world had already revealed the
preponderant role that logistics has when it comes to satisfying consumer needs.

Vanessa Quiroz López:

Knowing how to manage a warehouse isn’t always as easy as it seems, but if we do it the
right way, then it becomes easy to perform. A warehouse management system provides
many benefits. These may include reduced costs, error detection, productivity or efficiency
gains. WMS are designed to facilitate the product storage stage, reduce administrative
tasks, streamline logistics processes and reduce action times. It's true that costs vary from
solution to solution depending on your needs, but it's still important not to shop around for
the WMS.

A storage and distribution management system in an organization is necessary to generate

experience in the services provided, the use of these processes help to avoid the so-called
"bottlenecks" which becomes a fundamental aid to significantly reduce financial costs of
excessive inventory, as well as to avoid the shortage of some goods or assets within the
organization. In this sense, a WMS system allows the use of grouping capabilities for various
processes to achieve financial savings in organizations.

We also have to be very careful while selecting for the right WMS because it can take a
business to an important growth. Also, it's easy to look after all the inventory control process
with this tool.

Let's take in account that no matter how accurate a WMS is, if it’s not making any profit for
the business then it's worthless.

Mónica Rivera Moreno:

Managing a warehouse is a simple task when the correct steps and all procedures are
followed. The type of warehouse that it is, and how it works must be taken into account in
order to know what type of goods are stored and the necessary conditions of this warehouse
for proper performance. In the same way, the activities that are carried out have to be
02executed by each employee in this area so that everything is organized and distributed in
an adequate manner. Another crucial characteristic in the warehouse facility is how much the
purchasing process and the department in charge of it matter, since if these people make
purchases focused on the goals that are in the company, the merchandise will be of higher
value and what arrives at the storage will be easier to organize and distribute in the right
areas.Learning how a warehouse works is very important when you want the business to
prosper, we have to understand how they work from inventories to purchases and always
take into account a financial analysis that goes hand in hand with what you intend to buy,
since This must have an important opinion when it comes to buying more merchandise. One
of the most fundamental parts in a warehouse is to make inventories from time to time for
different functions, since the merchandise arrives, how it is sold, how much is sold better and
how much should be bought, all this in order to avoid losing financially.