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Warehouse and Inventory Management: UNIT-1
Warehouse and Inventory Management: UNIT-1
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Warehouse:
“A warehouse should be viewed as a temporary place to store inventory and as a buffer in supply chains.
It serves, as a static unit – in the main – matching product availability to consumer demand and as such has a
primary aim which is to facilitate the movement of goods from suppliers to customers, meeting demand in a timely
and cost-effective manner.
adapted from Van den Berg (2013)
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NEED FOR WAREHOUSING
Seasonal Production:
There is a need for proper storage or warehousing for these kind of commodities from where they can be supplied as and when required as the
consumption or use of these commodities takes place throughout the year.
Ex: Agricultural commodities.
Seasonal Demand:
The production of these goods takes place throughout the year to meet the seasonal demand, so there is a need to store these goods in warehouse
to make them available at the time of need.
Ex: Umbrellas in rainy season.
Large-scale Production:
Manufactures produce goods in huge quantity to enjoy the benefits of large scale production , which is more economical as a result these goods
need to be secured till they are cleared by sales.
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Quick Supply:
It is essential to stock some goods near the place of consumption so that without making any delay those goods are made available
to the customers at the time of their need.
Ex: Industrial as well as Agricultural goods are produced at some specific places but consumed throughout the country.
Continuous Production:
To ensure the continuous production of goods factories require an adequate supply of raw material.
Price Stabilization:
To maintain a reasonable level of price of the goods in the market there is a need to retain sufficient stock in the warehouse.
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ISSUES AFFECTING WAREHOUSING
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ROLE OF WAREHOUSING
Regular Production.
Regular Supply.
Price stabilization.
Preservation of quality.
Financing.
Better price.
Maximum service.
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Ownership
Private Public
SELECTION OF WAREHOUSE
How Many
Centralized Decentralized
What Size
Where (location)
Interior Layout 8
What Products
Sequence of Warehousing Decisions:
Types of Warehouses:
Private warehouses.
Public warehouses.
Government warehouses.
Bonded warehouses.
Co-operative warehouses.
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Private warehousing:
The expenses of maintaining these must be carefully analyzed and evaluated:
They include:
Fixed expenses
Expenses incurred on warehouse equipment
Cost of wages for staff
Over time wages for staff
Other service charges
Budget allocation
Cost of regular maintenance ad repair
Cost of maintaining insurance records
Advantages:
Better monitoring system
Chance of committing an error is less.
If there is sufficient volume of goods to be warehoused, the cost of private warehousing is comparatively less than that of public warehousing.
Best choice at some locations due to non- availability of public warehouse.
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Has the opportunity to specially design its facilities for automatic material handling equipment.
Enabling the end users to increase their efficiency by means of better design and structured lay-out.
Efficient use of human resource in warehouse operations improves end users overall performance.
Intangible benefits in form of cost reduction in all warehouse operations.
Disadvantages:
Lack of corporate flexibility which increases complexity in operation.
Financial issues.
Low rate of return.
Tax issues are complicated.
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Public warehousing:
The forgoing cost factors operate in public warehousing as well. The expenses are distributed over several consignments of their clients.
Advantages:
System incompatibility.
Lack in availability of specialized services as and when required.
Adequate space may not always be available for end users.
Location of warehouse:
The space and time impose significant limitation on movement of goods from seller to buyer. The location of seller’s production and
distribution facilities in relation to those of customers is an important decision making process.
The optimal location is the one that is most likely to achieve the maximum rate of return on investment over the long run. 13
Considerations that determine the location of warehouse:
Should located at a convenient place where loading and unloading of goods can be easily done.
Availability of mechanical appliances.
Availability of adequate space inside the building.
Should have cold storage facilities for preserving perishable items.
Proper arrangement for protection of goods.
Sufficient parking space for quick loading and unloading of goods.
Round the clock security arrangement to avoid theft of goods.
Must be installed with latest fire-fighting equipment.
Receiving:
This includes:
Unpacking and repacking.
Unloading of incoming transport.
Quality control checks.
Checking. Temporary quarantine storage for goods .
Recording of receipts.
Deciding on where the received goods to be placed.
Inspection.
Repacking.
Put away.
Storage.
Order- order picking / selection.
Sortation.
Packing and shipping.
Cross- docking.
Replenishing.
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TYPES OF WAREHOUSE OPERATIONS
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WAREHOUSE LOCATION
The following are specific factors that need to be taken into account when deciding on a warehouse location:
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The potential neighbours
FACTORS DETERMINING NUMBER OF WAREHOUSES
Inventory costs.
Facility costs.
Systems cost.
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E- Fulfilment Centres:
Integrated fulfilment, where internet sales are carried out alongside existing retail operations;
Dedicated fulfilment, carried out in a purpose-built facility; and
Store fulfilment, which involves picking online orders from existing retail shelves for separate delivery ex store.
Specialized Warehousing:
Customs warehousing.
Refrigerated warehouses.
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ROLE OF WAREHOUSE MANAGER
Managers today have to do more with less and get better results from limited resources, more than ever before. A manager’s job is to provide
the environment where individuals are internally motivated to do the very best job possible, in the very best spirit possible, to make the very
best contribution possible. (Brian Tracy)
The provision of a responsive and cost-efficient warehouse that is aligned with the current and long-term requirements of the global business
strategy;
To ensure that the warehouse is capable of delivering the volume requirements of the business;
The development and management of industrial relations within the warehouse environment.
accuracy;
cost control;
cleanliness;
efficiency;
safety;
security.
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WAREHOUSE TRADE-OFFS
Warehouse managers are also expected to recognize and balance other trade-offs within the warehouse, examples are:
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Challenges of Warehouse Manager:
Environmental issues.
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LEAN WAREHOUSING
The concept of ‘lean’ comes from the manufacturing sector, more specifically the automotive industry, and is very much associated with Toyota and
the Toyota Way.
The idea is to identify the activities within the warehouse that absorb resources but don’t create additional value.
People Management:
This section concentrates on what we believe to be the lynchpin of the warehouse operation: the people.
These include:
Identifying, attracting and retaining good supervisors, first line managers and team leaders;
An ageing and constantly changing workforce, including the introduction of foreign staff;
People Challenges:
According to Ackerman (2000), effective supervisors and managers encourage an open exchange of ideas and have frequent discussions with
their staff and peers.
Motivational skills.
Problem-solving skills.
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Flexibility.
A comprehensive knowledge of company processes and procedures.
Ability to train others.
Be customer oriented.
Teamwork skills.
Operating hours.
Training.
Warehouse audit.
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Quality systems:
The list of quality standards that warehouse managers may deem necessary or advantageous for their operations.
ISO 9001 – a standard of requirements against which your Quality Management System can be evaluated;
ISO 14001 – a standard of requirements that defines and establishes controls to reduce your company’s impact on the
environment;
ISO 50001 – a standard of requirements that deals with the energy impact of your warehouse operation;
OHSAS – a standard of requirements against which your Health and Safety Management System can be evaluated; and
ISO 27001 – a standard of requirements which deals with all aspects of information security
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