Topic 10.

Storage Technology and Safety

A way of helping with the complex task of planning and managing a warehouse and
distribution network is using information technology.

As in many aspects of daily life, technology has arrived to change radically the way
things used to be done, increasing efficiency in the different tasks by reducing the time
it takes to perform them, and by decreasing the number of errors that were committed
in certain aspects are now automatic through this type of tools.

Managing a warehouse involves planning requirements, controlling inputs and

outputs, placing orders, following up on orders of different vendors, finding the
location of items in a big warehouse, maintaining records of all material movements,
forecasting the demand of several product lines, among other activities. Can you
imagine what performing all these functions would involve without the use of
technology?

10.1 Technological tools in support of inventory management

Information technologies in logistics allow companies to be more competitive,

innovative, and adaptable, as they provide the following five main elements:
A point of inventory management where technology is closely linked to warehouse
operations is found in material requirement planning. There are integral systems
comprising the activities of the areas in a company for resource planning with the
possibility of using them with a high level of efficiency.

The first of these systems was developed as a mechanism for manufacturing

companies to be able to calculate with more precision what to order, when to order,
and what quantities; this system is known as Material Requirements Planning  (MRP).

MRP is a computer-based information system that Coyle (2018) defines as follows:

A set of logically related procedures, decision rules and registries designed to translate
the master production program into synchronized net inventory requirements and the
planned coverage of such requirements for each necessary item or component with
the purpose of implementing the program.

The main function is to order and to schedule the need for parts, pieces, assemblies,
components, and other materials required to produce a determined article.

The main objectives of MRP are the following:

1. Guaranteeing availability of materials, components, and products for planned

production and client delivery.
2. Maintaining the lowest possible level of inventory to support the service
objectives.
3. Planning manufacturing activities, delivery schedules, and purchase activities.
4. Demand independent information for the final product or component.
5. Parent-component relationship, which is a structured list of materials, also
known as “BOM” (bill of materials), which lists all parts, components, and
assemblies comprising the end product, including information of the planning
 and manufacturing time factors. In short, it provides the “recipe” of quantities of
components and assembly sequence to elaborate the end product.
6. Status of final product inventory and all components. Information on the net
inventory requirement (gross requirement less available inventory) Orders are
placed for necessary components to ensure orders are released on time to
create higher level components according to schedule.

Some examples of MRP used by companies, mainly manufacturing ones, are SAP
(Material Management Module) and Oracle (JD Edwards).

Initially MRP was developed with the aim of maintaining control over materials that
have entered production, itemizing the quantities in inventory and how much was
needed to place the following order without shutting down production due to lack of
materials. Due the system's remarkable success in the operations of companies
implementing it, it created in parallel a system that added functions to cover other
aspects, such as maintaining control to pay vendors and manage output capacity, in
addition of keeping control of the location of materials in the facilities. This new
system was called MRP II, or Manufacturing Resource Planning.

According to Coyle (2018), MRP II serves as a

planning tool that helps describe the likely results of implementing strategies in areas
such as logistics, manufacturing, marketing, and finance.

The maximum benefits of MRP II include improved customer service through

decreased stockout and optimized delivery performance, and awareness of changes in
demand. A successful implementation of MPR II may also help decrease inventory
costs, decrease production line shutdowns, and create more flexibility in planning.

Another variant of this group of systems is DRP, or Distribution Requirements

Planning, which helps identify the adequate level of logistics to cover cost and service
objectives, determining replenishment programs between the production facilities and
distribution centers. The DRP develops a projection for each of the company’s products
in each distribution centers, evaluates inventories, and based on replenishment times
and forecast demand, determines quantities and order placement times, security
inventories, minimum and maximum levels for each distribution center.

The DRP’s objective is forecasting demand with higher precision and exploiting this
information to use it in developing production schedules. This way, an organization
may minimize input inventory (raw material) using an MRP with production schedules
while the output inventory (finished goods) is minimized using DRP.

This system elaborates a projection for each SKU (Stock Keeping Unit) and requires the
following:

 Demand forecast for each SKU.

 Current SKU inventory level (available balance).
 Safety stock goals.
 Recommended replenishment quantity.
 Replenishment lead time.

Later, an even more complex system was created, called Enterprise Resource

Planning (ERP), integrating all modules of a company.

Part of its attractive lies in its capacity to update and share exact information among
business processes:

 Accounting and finance.

 Planning and engineering.
 Human resources.
 Purchases.
 Production.
 Inventory/material management.

The main benefits are product automatization, savings in technology costs, greater
visibility of sales, inventory, and accounts receivable, process standardization, and
compliance with regulations.

Regarding warehouse management, there are specialized systems for that. The most
widely used systems for this task are those called WMS, or Warehouse Management
Systems. Despite this technology being developed since 1970, these systems are still
current thanks to their adaptability to new systems such as ERP and the high level of
control it provides in regular inventory operations, being reflected mainly in controlled
inventory levels respective to demand and productivity in product collection,
replenishment, and storage.
The WMS comprises a package including database systems, complemented with
specialized hardware and software, and related with radiofrequency technology
communications. Thus, it is possible to add value:

 Labor administration: Allows organizations to create tasks based on time

standards, supervise each employee's productivity, and audit the quality of their
work. Performance analysis, incentive programs, and productivity improvement
initiatives are supported by this tool.
 Task interleaving: Involves combining different tasks such as storing and
repositioning. In large warehouses the trip time may be reduced significantly
not only increasing productivity but also decreasing wear of forklifts and saving
in energy costs by reducing fuel consumption.
 Systems integration: The ability to relate WMS with the business resource
planning system, order management and transportation administration systems
will provide a strong flow of information throughout the organization and the
supply chain.
 Automatic data collection: They use automatic identification tools to enter
data with precision, provide visibility of product flows in the distribution center,
and automatize tasks. Once they have collected data, they are transmitted to
the WMS for decision processing, report generation and performance analysis.
 Compliance flexibility: Supports many types of orders, including omnichannel
orders for individual units and commercial orders of boxes or full product
pallets. This also facilitates box collection for distribution and cross docking
compliance; supports light assembly operations and allows several order
collections patterns to be used in the distribution center.

In addition, there are other tools such as automatic identification scanners allowing
barcode reading, voice instructions, biometrics technologies, identification by
radiofrequency, smart cards, among others. This type of tools is based on
technological developments, developed with the objective of ever-increasing efficiency
in time and costs in supply chain management.

10.2 Safety measures in warehouses

Safety in warehouses is a topic with large repercussions in a company's logistics

operations. Due to its nature, warehouses, just like production facilities, are work
centers with an elevated risk of accidents due to the constant handling of heavy loads
and diverse materials, in many cases of biohazardous composition, and there are box
assembly and packaging activities, machinery being used to support material
movement, among other activities.
To avoid or at least reduce the number of accidents in work centers that may endanger
the integrity of personnel, the facilities, inventories, or any other assets, companies
establish safety policies allowing them to be preserved.

In a warehouse there must be order in the organization both facilities, inventory, as

well as personnel actions. It is essential for the correct operation to have the following:

By establishing a code of conduct and safety regulations, the company tries to protect
employees against potential accidents that may endanger their physical health. The
key element implicit in all safety action is training personnel in the best practices in the
working area.

Conclusion

Warehouse administration is a very complex process which brings several elements

together in its operation and its correct function is based mainly on proper planning.

There is technological support representing an integral solution for the control of

different areas of distribution centers, decreasing errors and time considerably by
automatizing many functions. This represents significant changes in a company’s
operations efficiency and the possibility to compete in an increasingly demanding
market.
Through information systems used in modern logistics management, it is possible to
feed real time information, so all the organization have access to it and use it for
different purposes in each area, making planning and control and current resources
and future requirements more efficient to take advantage of the opportunities they
represent for the company.

On the other hand, the safety element in the company's work centers is an element
that must be stressed, as the lack of a proper, safe, risk-free environment jeopardizes
the integrity of the company's personnel and assets, therefore, of the operation in
general.