Chapter 2 - Warehouse Operations (Sem 2 2018 2019)

Warehouse Operations
International University
Vietnam National University HCMC
Reading materials
Hompel, M., & Schmidt, T. (2006). Warehouse

management: automation and organisation of warehouse
and order picking systems. Springer Science & Business
Media (chapter 2)
2
Contents
1. Logistics framework
2. Functions in warehouse systems
3. Management of Warehouse Systems
1.1. Packaging:
• A transformation process constitutes a change of the system
status of goods with regard to time, location, quantity,
composition or quality.
• The units are present in the warehouse systems in varying
forms and combinations depending on the requests of the
relevant sub-systems and operating means and on the customer
requirements.
• Each goods and material flow is necessity to protect the goods
from impacts during transport, transshipment and storage (TTS
processes) to avoid a loss of quality => choosing a suitable
packaging and building so-called unit loads.
• Facilitate efficient handling during these processes a packaging
should allow for easier storage and transportation.
For example: in the form of uniform units which can be
stacked or transported by conveyors
1.1. Packaging:
Different types of packaging have established for the
different sections of the transport chain.
Types of packaging are also classified according to the
waste they produce:
• Transport packaging: Protect the goods during the
transport from the manufacturer to the distributor.
• Sales packaging: Packaging which are used by the
final consumer for the transport of goods or until
their consumption.
• Outer packaging: Additional packaging of sales
packaging which allow for distribution of the goods
in the form of self-service, protect the goods against
theft or serve as marketing media.
1.2. Logistic units:
A logistic unit can be created by choosing a suitable form of
packaging.
For example: the consolidation of bottles with condensed milk
into pack ages.
Packages are the smallest handing unit. For transportation
they are combined into loading units. The building of loading
units is the efficient consolidation of goods into larger,
manageable units. These are handled by means of suitable
loading aids.
These loading aids are classified as follows:
– bearing loading aids on which the goods are placed or stacked
– enveloping loading aids which take up the goods and support
them sidewise
– encasing loading aids enveloping the goods on all sides
Change of the
number of articles
and loading units
along an
exemplary
transport chain
Change of the number of articles and loading units along an

exemplary transport chain
Due to the special requirements of order-picking loading units have to
be classified even further:
• Storage units are those units in which an article is stored in the
warehouse (e.g., pallets, also supply units).
• Supply units are those units which are provided for retrieval (e.g.,
boxes or containers).
• Retrieval units are units of a certain article which are retrieved by
the picker, if necessary with several single picks (e.g., packaging)
• Picking units include that quantity of articles or packaging which a
picker can retrieve with one pick.
• Collective units are built when the picker collects the single items on
a pick list.
• Shipping units represent the number of articles as ordered by the
customer.
• The single shipping units are often built by means of loading aids
(pallet, skeleton box, etc.).
2. Functions in
warehouse systems
A warehouse is a large building where goods are stored, and

where they may be catalogued, shipped, or received,
depending upon the type.
The function of this warehouse is to break down large
quantities of product and redistribute it in smaller one.
It is including: pre-receipt, receiving, put-away, storage,
picking, replenishment, value-adding services and
despatch
=> The smaller the handling unit, the greater the handling cost
Figure. process in warehouse

Figure: Basic elements

of warehouse
management systems
and their role with
regard to warehouse
operations
• Goods acceptance and receipt
• Retrieval / picking
• Consolidation point
• Order - picking
• Packaging department
• Shipping department
2.1. Goods acceptance and receipt
Notification of goods receipt and delivery date:

• Help to avoid or reduce waiting times for trucks and,
on the consignee’s or loader’s side
• Help to coordinate system loads and to avoid load peaks
Goods acceptance:
• The consignment is compared with the order and the bill
of lading (BL) is compared with the notification.
• The notification data are temporarily entered into the
inventory system to accelerate the goods receipt process.
• Arriving trucks have to be directed and assigned to the
loading gates => yard management systems guarantee
for a coordinated traffic on the premises and above all to
minimize unnecessary searching and switching trips.
Notification of goods receipt and delivery date:

• Help to avoid or reduce waiting times for trucks and,
on the consignee’s or loader’s side
• Help to coordinate system loads and to avoid load peaks
Goods acceptance:
• The consignment is compared with the order and the bill
of lading (BL) is compared with the notification.
• The notification data are temporarily entered into the
inventory system to accelerate the goods receipt process.
• Arriving trucks have to be directed and assigned to the
loading gates => yard management systems guarantee
for a coordinated traffic on the premises and above all to
minimize unnecessary searching and switching trips.
Goods receipt:
• The goods receipt department can also be informed
about the pending delivery.
• The planning and reservation of buffer space.
• The choice of a suitable terminal (e.g., loading gates or
bays) or the print of in-house labels for the internal
identification of goods.
Incoming goods inspection:
• The consignment is submitted to a physical check
 Type and quantity is performed by the unloading staffs.
 The condition of some goods is carefully checked by the quality
assurance.
 A simple visual test or laboratory tests of samples
• Faulty goods are marked with a blocking indicator and
moved into special areas or stored under consideration
of the blocking
International indicator.
University
16
2. Inbound process
Receiving in warehouse
Receiving may begin with advance notification of the arrival of

goods.
=> This process allows the warehouse to schedule receipt and
unloading to coordinate efficiently with other activities within the
warehouse
Receiving, goods-in or in-handling is a crucial process
within the warehouse. Ensuring that the correct
product has been received in the right quantity and in
the right condition at the right time is one of the
mainstays of the warehouse operation
There are some problems should discuss with suppliers prior to receiving:
• Size and type of cartons
• Type of transit packaging – cardboard, plastic, totes, metal stillages,

roll cages, pallets palletized or non-palletized delivery of product size
(length, width and height) and type of pallets, eg euro pallet, four-way
entry
• Specific labeling such as product description, barcode and quantities;
position of label on carton and pallet;
• Carton quantities (inner and outer carton quantities, for example); and
mode of transport, delivery quantity and frequency of delivery.
Figure 1: the size of the outer cartons does not allow the warehouse operation
to optimally stack the pallet
Reparation
Prior to the actual receipt a number of processes need to take place
1 ●
Ensure about supplier delivery times
2 ●
Booking-in or dock scheduling system
Match the length of the time slots to the time

3
●
estimated to fulfill the tasks
keep records of the time and share this information

4
●
with your booking-in team
Checking
Once the goods are offloaded, you need to decide whether they need to
be checked before put-away
A random check of certain product lines rather than
1
●
checking the whole consignment
●
Trade-off here between the time it takes to check inbound deliveries, the delay
2 in the product being entered onto the system and available for sale, the number
of discrepancies found
3 The actual delivery cross checked against the paperwork once

●
the whole load has been received into the warehouse
4 Products can be scanned and the details compared in real time

●
with the expected quantities to determine any discrepancies
Cross docking
The goal of most warehouses is to increase throughput

rates and reduce the amount of stock held
It is defined as “Cross docking is a process where

products are moved directly from goods-in to the
despatch bays. This replaces the need to place the
product into store and any subsequent picking operation”
Cross docking
The goal of most warehouses is to increase throughput

rates and reduce the amount of stock held
It is defined as “Cross docking is a process where

products are moved directly from goods-in to the
despatch bays. This replaces the need to place the
product into store and any subsequent picking operation”
Cross docking
Example of cross docking

Quality control
It is accepted that certain products will require more

stringent checking on receipt. These include high-value
items, food, hazardous goods, temperature-sensitive
product and pharmaceuticals
It is noticed that a area close to the receiving bay should

be set aside to spot check items on arrival. This needs
to be done as promptly and as efficiently as possible so
as to avoid congestion and to get the products onto the
system quickly
Put - away in warehouse
This is an internal logistics process from receipt of a load to when
it is stocked in its final destination within a warehouse.
This system to work effectively if a great deal of information
needs about:
• Size, weight and height of palletized goods;
• Results of an ABC analysis or slotting, where fast-moving
goods are
• Placed closest to the despatch area (an area we will cover
later)
• Current order data
• Family product groups
• Actual sales combinations
• Current status of pick face for each product;
• Size of pallet locations and weight capacity of racking
Put-away
• W/H manager must know at all time that:

• Which storage locations are available
• How large they are
• How much weight they can take
After product is put away, its location must be

recorded
Cost of put away is about 15% of W/H operating

expenses
ABC Classification
• Class A
• 5 – 15 % of units
• 70 – 80 % of value
• Class B
• 30 % of units
• 15 % of value
• Class C
• 50 – 60 % of units
• 5 – 10 % of value
ABC Classification
PART UNIT COST ANNUAL USAGE
1 $ 60 90
2 350 40
3 30 130
4 80 60
5 30 100
6 20 180
7 10 170
8 320 50
9 510 60
10 20 120
ABC Classification
TOTAL % OF TOTAL % OF TOTAL
PART VALUE VALUE QUANTITY % CUMMULATIVE
9 $30,600 35.9 6.0 6.0
8 16,000 18.7 5.0 11.0
2 14,000 16.4 4.0
A 15.0
1 5,400 6.3 9.0 24.0
4 4,800 5.6 6.0 B 30.0
3 3,900 4.6 10.0 40.0
6 3,600 4.2 18.0 58.0
5 3,000 3.5 13.0 71.0
10 2,400 2.8 12.0 C 83.0
7 1,700 2.0 17.0 100.0
$85,400
ABC Classification
% OF TOTAL % OF TOTAL
CLASS ITEMS VALUE QUANTITY
A 9, 8, 2 71.0 15.0
B 1, 4, 3 16.5 25.0
C 6, 5, 10, 7 12.5 60.0
Example 10.1
3. Outbound processes
Process of customer orders
• On receipt of customer orders the warehouse must

perform checks such as to verify that inventory is
available to ship
• The warehouse must produce a “pick list” to guide

the order picking
• The order picking include assigning operators and

sequence of order picking and shipping
Order Picking
Order picking account for 55% of warehouse operations

cost, it can be broken down to:
• Traveling 55%
• Searching 15%
• Extracting 10%
• Paper work and other 20%
*% of total order picking cost

Order Picking
• Flow time is a main indicator for picking performance
• Short flow time can lead to better service and

responsiveness
• Flow time depend on
 How large the unit load, serial or parallel pickers
 Number of pickers
Order Picking
• If the total work to pick and load a truck is small, one

picker may be assign to each order
• If the orders to pick and load are large or span distant

region, several pickers are needed to shorten the flow
time
Order Picking
• For a warehouse that move a lot of small products for

each of many customers, such as shipping to retail
stores, order picking may be organized as an assembly
line
• The assembly line needs to be balance using some line

balancing techniques
Checking and Packing
• Packing can be very labor intensive
• Every item needs to be handled but with minimal walking
• Then, checking can be performed simultaneously to make

sure completeness of order
• Incomplete order leads to return which is expensive

• Packing must aim at minimizing broken space when
shipping
• Also, customers want orders in as few containers as
possible to avoid excessive handling cost
Shipping
• Shipping generally handles larger units than picking
• Less labor intensive
• Goal is to
 Minimize transportation cost
 Protect goods
 Ease load and unloading

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Warehouse Operations

Hompel, M., & Schmidt, T. (2006). Warehouse

Change of the number of articles and loading units along an

A warehouse is a large building where goods are stored, and

Figure. process in warehouse

Figure: Basic elements

• Goods acceptance and receipt

Notification of goods receipt and delivery date:

Notification of goods receipt and delivery date:

Receiving may begin with advance notification of the arrival of

• Size and type of cartons

• Type of transit packaging – cardboard, plastic, totes, metal stillages,

Match the length of the time slots to the time

estimated to fulfill the tasks

keep records of the time and share this information

with your booking-in team

checking the whole consignment

3 The actual delivery cross checked against the paperwork once

the whole load has been received into the warehouse

4 Products can be scanned and the details compared in real time

with the expected quantities to determine any discrepancies

The goal of most warehouses is to increase throughput

It is defined as “Cross docking is a process where

The goal of most warehouses is to increase throughput

It is defined as “Cross docking is a process where

Example of cross docking

It is accepted that certain products will require more

It is noticed that a area close to the receiving bay should

• W/H manager must know at all time that:

After product is put away, its location must be

Cost of put away is about 15% of W/H operating

• On receipt of customer orders the warehouse must

• The warehouse must produce a “pick list” to guide

• The order picking include assigning operators and

Order picking account for 55% of warehouse operations

*% of total order picking cost

• Flow time is a main indicator for picking performance

• Short flow time can lead to better service and

• Flow time depend on

 How large the unit load, serial or parallel pickers

• If the total work to pick and load a truck is small, one

• If the orders to pick and load are large or span distant

• For a warehouse that move a lot of small products for

• The assembly line needs to be balance using some line

• Every item needs to be handled but with minimal walking

• Then, checking can be performed simultaneously to make

• Incomplete order leads to return which is expensive

• Shipping generally handles larger units than picking

• Less labor intensive

 Minimize transportation cost

 Ease load and unloading

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