Warehouse Management

Prof: Pradeep Pai.

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Is it only a storage facility?
• A warehouse is typically viewed as a place to
store inventory.
• However, in many logistical system designs,
the role of the warehouse is more properly
viewed as a switching (from one party to
other) facility as contrasted to a storage
facility.
• In a broader logistical spectrum, warehouse
plays a vital role to group products into
assortments desired by customers.
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Consolidation Warehouses

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Benefits of Consolidation
Warehousing
 Shipment consolidation is an economic benefit of
warehousing.
 With this arrangement, the consolidating warehouse
receives and consolidates materials from a number of
manufacturing plants destined to a specific customer
on a single transportation shipment.
 The benefits are the realization of the lowest possible
transportation rate and reduced congestion at a
customer's receiving dock.
 These consolidation warehouses allows the firms to
provide the customer shorter lead times
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Break bulk warehouses…

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Break bulk warehouses
 Break bulk warehouse operations are similar to
consolidation except that no storage is performed.
 A break bulk operation receives combined customer
orders from manufacturers and ships them to
individual customers.
 The break bulk warehouse sorts or splits individual
orders and arranges for local delivery.
 Because the long-distance transportation movement
is a large shipment, transport costs are lower and
there is less difficulty in tracking.

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Processing/Postponement
 Warehouses can also be used to postpone, or delay, production
by performing processing and light manufacturing activities.
 A warehouse with packaging or labeling capability allows
postponement of final production until actual demand is known.
 For example, vegetables can be processed and canned in
"brights" at the manufacturer.
 Brights are cans with no pre-attached labels.
 Benefit 1 - Risk is minimized because final packaging is not
completed until an order for a specific label and package has
been received.
 Benefit 2 - the required level of total inventory can be reduced
by using the basic product (brights) for a variety of labeling and
packaging configurations

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 Service Benefits of Warehouse
Five basic service benefits are achieved through
warehousing:
– spot stock, to fill customer orders during critical
marketing period in a variety of markets e.g. festival
sales, agricultural products to farmers, etc.
– assortment,
– mixing, big truck loads re-shipped to various
destinations in small consignments on the basis of
requirement.
– production support, provides for safety stock when
items purchased from outside vendors, and
– market presence. More responsive to customer needs

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 Warehouse Operating
Principles
 Once it has been determined to use a warehouse, the next step is
designing it.
 Whether the warehouse is a small manual operation or a large
automated facility, the following three principles are relevant:
 Design criteria,

 Handling technology, and

 Storage plan.

 Three factors to be considered in the design process are:

 the number of stories in the facility,

 height utilization,

 product flow, and

 Future Expansion

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A Sample Storage Area

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Selection of Material-Handling
System & Layout
 A material-handling system is one of the initial considerations of
warehouse planning.
 Movement is the main function within a warehouse.
 Consequently, the warehouse is viewed as a structure designed
to facilitate maximum product flow.
 It is important to stress that the material-handling system
should be selected early in the warehouse design stage.
 Layout of a warehouse depends on the proposed material
handling system and requires development of a floor plan to
facilitate product flow.
 It is difficult to generalize about warehouse layouts since they
must be refined to fit specific needs.
 If pallets are to be utilized, the first step is to determine the
pallet size.
 A pallet of nonstandard size may be desirable for specialized
products, but whenever possible, standardized pallets should be
used because of their lower cost. 11
 Pilferage Protection
 Protection against theft of merchandise has become a major
factor in warehouse operations.
 Such protection is required as a result of the increased
vulnerability of firms to riots and civil disturbances.
 All normal precautions employed throughout the enterprise
should be strictly enforced at each warehouse.
 Security begins at the fence.
 As standard procedure, only authorized personnel should be
permitted into the facility and surrounding grounds and entry to
the warehouse yard should be controlled through a single gate.
 Computerized inventory control and order processing systems
help protect merchandise from being carried out of the
warehouse doors.
 No items should be released from the warehouse unless
accompanied by a computer release document.
 If samples are authorized for use by salespersons, the
merchandise should be separate from other inventory.
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 Product Deterioration
 Within the warehouse, a number of factors can reduce a product or
material to a non-usable or non-marketable state.
 The most obvious form of product deterioration is damage from careless
transfer or storage.
 Another major form of deterioration is non-compatibility of products stored
in the same facility.
 The primary concern is deterioration that results from improper warehouse
work procedures.
 A constant concern is the carelessness of warehouse employees.
 In this respect, the forklift truck may well be management's worst enemy.
 Regardless of how often operators are warned against carrying overloads,
some still attempt such shortcuts when not properly supervised.
 In one situation, a stack of four pallets was dropped off a forklift truck at
the receiving dock of a food warehouse.
 Standard procedure was to move two pallets per load.
 The value of the damaged merchandise exceeded the average daily profit
of two supermarkets.
 Product deterioration from careless handling within the warehouse is a form
of loss that cannot be insured against and constitutes a 100 percent cost
with no compensating revenue.
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