WAREHOUSING

Chapter 6
"My mind is a warehouse of carefully
organized human emotions. I lock away the
things that do not serve me."
- Tahereh Mafi
 KEYWORDS
Warehousing
Strategic Warehousing
Warehouse Logistics
Shipping Hub
Distribution Centers
Cross Docking
Warehouse Automation
Advanced Warehouse Management System
Warehouse Insurance
 CONCEPT OF WAREHOUSING
DEFINING OF WAREHOUSING

A warehouse is a structure intended for storing goods. Goods may

either be:
Raw materials
Industrial goods
Finished products
Warehouses are used mostly by:
Manufacturers Businesses
Importers Exporters
Wholesalers Customs
Transport
 EVOLUTION OF WAREHOUSING

Evolution of Strategic Warehousing

In distant past, warehouses were used to coordinate product supply with Customer
demand. However, much has revolutionized after the onset of WWII. The explosion
and sudden increase of the consumer economy after the second world war witnessed
the upsurge and intensification of distribution networks for consumer goods.

Warehousing types evolved to accommodate the following dynamic aspects.

Distribution centers
Consolidation terminals
Break-Bulk facilities
Cross-docks
 WAREHOUSING IN THE AGE
OF E-COMMERCE

For those working in the warehouse industry for quite some time now
would agree without question that today's warehouses are much
different as compared to its status ten, fifteen, or twenty years ago. But
what could have triggered the drastic change in this industry? Blame it
all on e-commerce. But before making any nasty conclusions, let's just
say that e-commerce has helped the warehouse industry in more ways
than one can imagine.
The most obvious warehouse changes that had taken place during the last
two decades include the following:
Innovative, ground-breaking, and advanced storage systems
Better tracking configurations
Comprehensive training and modern technology
Bar code and scanners were continuously improved to story modate
product's pertinent information such as price, making it instantly available
when needed.
 KINDS OF WAREHOUSES
Centralized retum centers
Customer facing
Flow warehouses
Futuristic facilities
High ceiling facilities
On demand warehouses
Pop-Up warehouses

The outcome of e-commerce and technology to warehousing are both

evolutionary and revolutionary
 WAREHOUSE LOGISTICS
A strategic component of logistics management, warehousing affords businesses the
management of the transportation and storage of their inventories

But what's the difference between warehousing and logistics?

Warehousing and Logistics are two distinctive facets with parallel roles within the
Supply Chain. Though different in its very essence, they both provide special features and
their collaboration and synchronization is the key to a smooth operation.

To further understand the difference, let's particularize their specific functions and tie up
their collaborative contributions as Warehouse Logistics. First. Warehousing is referred to
as the safe storage of goods, inventory, and information within an identified structure,
building, or area.
Logistics, on the other hand, is the predominant and all-embracing principles
and function of: .
Transportation
Warehousing
Internal movement of the goods, inventory, and information to a
manufacturing line and/or back to the firm from the customer (Reverse
Logistics).

To understand Warehouse Logistics, let us first go back and trace Teaning of

logistics itself as discussed in previous chapters. The clear-definition of logistics
includes the following:
Detailed planning
Organization
Management
Implementation of complex operations.
In short, Warehouse Logistics incorporates all the wide-ranging, complex aspects involved
in warehousing such as:
Organization
Movements
Management

This includes: .
The flow
Shipping of physical inventory
Receiving
As well as that of more abstract goods, including:
1. Information and
2. Time
 Warefsouse Logistics may also stretch to cover issues ranging from any or all of the
following:
Warehouse Pest Control
Damaged Goods Handling
Safety Policies
Human Resources Management
Customer Returns
Challenges of Warehouse Logistics

Depending on how large the warehouse is, not to mention the daily flow of
transactions, conventional and familiar warehouse logistics challenges circle
around organization.

Among the many proverbial and recognizable encounters in warehouse

management includes the following:
Pinpointing the precise whereabouts of a definite item of inventory Locating
goods that are about to expire (NearEx or Near Expiry products)
 Isolating the pallet that carted a supposedly expired and/or damaged items
Determining the truck that transported an item that was damaged during shipment
and handling.
Identifying the goods that should be released first following the First-In First-Out
(FIFO) System.

Such matters are vital to achieving efficient and smooth operations thus generating
healthy revenues. But more than the challenges mentioned above, the extent of concern
runs even deeper for warehouse management.
HOW TO IMPROVE WAREHOUSE LOGISTICS

One of the most sought-after tools is the Advanced Warehouse Management

Systems. It is an integral part of Manufacturing and Distribution processes It
works in conjunction with the Inventory Management and Shop Flor Control
systems to manage your inventory and the products that you produce and
ship. Also, it controls many aspects of warehouse operations.

Receiving Retrieving
Storing items Shipping

With the right vision and forecast, one can actually design a warehouse t
optimize its available space, manpower time, and the unique storage
requirements of the goods that you store such as:
Perishable vs. Non-perishable goods
Food and Non-Food items
ADVANCED WAREHOUSE MANAGEMENT SYSTEMS OFFER THE FOLLOWING:

Gives real-time insight into your warehouse, and equip you - and all your employees with the necessary tools to
effectively, efficiently and profitably manage your warehouse.
Create a logical model of your warehouse in as much detail as you need by specifying such characteristics as
location, dimensions, temperature, humidity, and lighting.
Create a logical model of each item in your warehouse to allow the system to match items to storage locations
based on the characteristics of the items and settings.
Control how stock is stored, picked, and replenished by setting up rules for the system to follow.
Move stock to and from specific locations using manual input or automatic system-generated suggestions.
Use random locations for storage by allowing the system to track inventory for you.
Generate an audit trail of reports for each stock movement.
Sequence your employees trips through the warehouse to maximize their productivity.
Confirm stock movement with minimal data-entry keystrokes.

SALIENT FEATURES OF ADVANCED WAREHOUSE MANAGEMENT SYSTEM

User-defined rules for stock movement .

User-defined parameters for items and locations to control stock movement
Fixed and random locations for more efficient stock movement
Automatic shipping carton selection during picking
Ability to review warehouse contents using up to nine levels of detail
Manual or automatic storage, picking, and replenishment of stock .
Audit trail reporting of inventory movement
 WAREHOUSE MANAGEMENT SYSTEM (WMS) AND
WAREHOUSE LOGISTICS

Advantages of incorporating WMS in Warehouse Logistics:

Ensure accurate, real-time inventory counts.
Know if you have enough supplies to cover a prescribed period of time.
Decrease returns.
Consider the principle "Do it right the first time" to avoid retums and added
costs and possible loss of trust and customers.
Auto-replenish stock.
Don't wait until the last minute when you're already out (or nearly out) of stock
before ordering. A safety level should be your guide. thus providing the
necessary warning or "red flag" to indicate it's time to do some reloading.
Maximize warehouse space.
 BENEFITS OF WAREHOUSE LOGISTICS

INCREASED REVENUE That's the best benefit of controlled warehouse logistics and the
goal of every business per se. After all, you do not go and invest into something wishing
you'd end up in bankruptcy, right?

Simple observation and analogy states that when...

Functions and Objectives of Warehouses
 PRIMARY FUNCTIONS OF A WAREHOUSE

Storage of Goods

Warehouse perform two types of storage:

1. Planned Storage
2. Extended Storage
Seasonality in demand
Erratic demand
Product conditioning
Speculative purchases
Discounts/Promos
Price change expectations

Shipping Hub
Infromation Management
Warehouse Management Systems perform core functions that include the following:

Receiving goods
Ensuring efficiency in storage
Tracking stock
Picking and shipping
Dispatching goods
Providing information to managers
SECONDARY FUNCTIONS OF A WAREHOUSE

Protection of Goods
Risk Bearing
Processing
Grading and Branding/Packing
Transportation
Simple Storage. We cannot over emphasize the fact that warehousing is mainly for
storage purposes. Many businesses, especially the big ones, either own, build, or rent
warehouse spaces for storing their inventories have their storage space Well it can either
be a garage, a spare bedroom, or basement.

Ease of Access. Imagine yourself always struggling to find something inside your own
house. No matter what you are looking for, if your surroundings are cluttered and
unorganized, it would take so much of your time just locating one particular item.

Improved Turnover. In reference to time interval, the longer inventory sits the morelt
incurs costs. There are two common methods used in warehousing and distribution to
better manage inventory turnover. These are:
FIFO (First-In First-Out) model which helps keep inventory from becoming obsolete.
JIT (Just in Time) model which reduces the amount of time inventory sits.
Enhanced Production Processes. Nothing beats awareness. With just a dick in your
computer, search engines and electronic linkages lets you know your exact inventory
situation no matter where you are. You can track down your inventory levels 24/7.

Reduced Problematic Circumstances. Construct regular inventory audits and treat it as

an important objective to help you recognize and discern untoward incidences such as
theft, damage, erroneously shipped orders and missing stocks that can cause havoc to
your business.

Optimal Safety. The bigger the warehouse you have equates to more personnel and
inventory to manage. As such, the bigger chances of encountering workplace accidents.
Make sure to meet with a credible insurance provider and consider the expertise of local
fire marshal, a security professional and an occupational safety inspector to ensure the
safety and security of your facility.
 TYPES OF WAREHOUSES

Private Warehouses
Public Warehouses
Government Warehouses
Co-operative Warehouses
Bonded Warehouses
Distribution Centers
Cold Storage
Import and Export Warehouses
Climate Controlled Warehouses
Agricultural Warehouses
Private Warehouses These are owned and managed by industrialists the producers and/or
merchants for the primary purpose of exclusively storing their own goods.

Public Warehouses These warehouses are built and operated to store, preserve, and maintain
the goods and merchandises of an individual, a partnership firm or a company and are usually
rented on contractual basis for a period of time.

Government Warehouses These warehouses are owned, managed and controlled by central or
state governments or public corporations or local authorities. Such warehouses cater to the food
supply of the nation.

Co-operative Warehouses These warehouses are owned, managed and controlled by co-
operative groups in the societies. They provide warehousing facilities at the most economical
rates to their respective members.

Bonded Warehouses These warehouses are owned, managed and controlled by government as
well as private agencies. Private bonded warehouses have to obtain license from the
government.
Distribution Centers/Warehouses These are typically described as large depots whose
operations are highly automated and may be owned or rented by manufacturers. Their
operation includes the following activities: .
Receiving goods from various plants and suppliers
Order taking
Providing delivery services to its customers.

Cold Storage It provides storage for perishable goods whose temperature variation is
controlled to meet the requirement of some sensitive items.

Import and Export Warehouses These are usually located near ports where
international trade is carried out. It provides storage facilities for goods awaiting onward
movements. Its facilities may also provide packaging, inspection, markings, among
others.
Climate Controlled Warehouses It handles storage for products that needs special
handling conditions Unlike cold storage who provides freezers for frozen products,
climate-controlled warehouses also have humidity-controlled environment for delicate
products.

Agricultural Warehouses As the name implies, it provides storage for agricultural

produce located in strategic areas. They are usually depicted as assembling or regulated
markets. Agricultural commodities are received either directly from farmers, wholesalers,
or agents. Agricultural warehouses encourage speculative training.
 WAREHOUSE DESIGN,PROCESS & COSTS

warehouse design consideration

 RECEIVING
INPUT Schedule Carrier
Unload Vehicle
Inspect for damage

WAREHOUSE PROCESS

Put-away Storage
Equipment
Identify Product
Stock Location
Identify Product Location
- Popularity
More Products - Unit Size
Update Records - Cube

Shipping Preparation Order Picking

Packaging Information
Labeling Walk & Pick
Stacking Bath Picking

SHIPPING
Schedule Carrier
OUTPUT
Load Vehicle
Bill of Loading
Record Update
 cost of operating a warehouse
RH&D - Receipt, Handling and Dispatch
- Refers to any expenditure on moving the goods into or out of the warehouse.
Storage is the cost incurred as the goods rest in the facility.
Operations Administration is the cost of keeping the facility open, specifically
known as overheads. Line supervision, clerical support, IT, insurance, office supplies,
and taxes all fall under operational expenses.

Capital Cost Operating Cost

Costs of space and materials handling equipment Cost of labor

Intending for the principle of supply and demand to work appropriately, a warehouse
needs to have the suitable product in the following positions: .
Buy-ready condition
In the right place
At the right time.

The vinestones to making a warehouse add value to the product they ship are:
Protection
Accessibility

To make this a reality, five requintments are to be met and to be effectively. These are
item protection
Item accessibility
Equipment
Space
Labor
Functioning within the parameters of these objectives, the following th suggestions on
how to effectively reduce cost:

Functioning within the parameters of these objectives, the following th suggestions on

how to effectively reduce cost:
Reduce space by optimizing storage.
Maximize the use of space. What's the use of a very large warehouse if is not optimally
filled? Idle space is costly and not generating anything at all.
Protect your inventory.
Certain losses occur as a result of misplacement or theft, and a large portion results
from stock damage.
Use cross docking.
Transferring products directly to the customer from the supplier reduces costs by
eliminating the middleman in the equation.
 Implement energy cost reduction.
Much of the overhead expenses are due to lack of discipline of personnel who do not bother to
practice ethics in the workplace simply because they do not pay the bills.
Reduce labor related costs.
Operating with fewer number of employees is not the best solution. Paying them less is not a
good option either. But you should not pay idle employees for contributing nothing. Time is
money.
Make technology work for you.
Automation is expensive. But look at its long-term effects. Although there will be a high outlay of
funds for new installation and maintenance costs, machines can run and produce more in
comparison to human ingenuities.

Use machineries and equipment wisely. Set up a regular maintenance schedule to avoid
unnecessary and unexpected breakdowns.

In a nutshell, in order to MAXIMIZE PRODUCTIVITY and MINIMIZE COST, Warehouse

Management must work with the following: Maximize use of space Effective use of labor &
equipment.
 WAREHOUSE AUTOMATION

The recent trend is to rely more and more on automation. With the aid
of technology, computerization,networking, and robotics, operations
are made easier and more accurate.

There are a number of reasons as to the whys and wherefores of

automation preferences. The most obvious of which are the following:
Reduce total cost of distribution
Raise customer service via prompt delivery and accurate order
filling
More control in distribution operations
 Warehouse Management System
Warehouse Management Systems (WMS) integrate procedures and
software support to standardize storage and handling work procedures. It is
a key part of the supply chain and primarily aims to control the movement
and storage of materials within a warehouse and process the associated
transactions, including shipping, receiving, storage, and picking.

Warehouse Management Systems often utilize the following:

Automated
AIDC AS/RS AGVS
Carousels
 AIDC-Auto ID Data Capture technology such as:
Barcode scanners
Mobile computers
Wireless LANS
Radio-frequency identification (RFID) to efficiently monitor the flow of products. Once data has
been collected, there is a real-time wireless transmission to a central database. The database
can then provide useful reports about the status of goods in the warehouse.

A5/RS-Automated Storage Retrieval System

An automation system with high-rise racks that are loaded and aisle. unloaded using automatic
storage machines within the aisle.
AGVs-Automatic Guided Vehicles
These can be used to transport, store and retrieve loads for warehouses, which are mainly
associated with the manufacturing and shipping industries.
Automated Carousels
are used in warehouse to move loads to a pick-and-drop station.
 ADVANTAGES OF WAREHOUSE AUTOMATION

Automating warehouse operations can be an attractive supply chain option for many businesses,
offering benefits such as:
Low-staffing requirements
Efficient logistics operations
Accurate service delivery
Cost reduction
Improving productivity
Accuracy Visibility and transparency of the inventory data

WAREHOUSE INSURANCE
In this summary this is about warehouse insurance within the context of supply chain and logistics management. It
highlights the need for specialized insurance to meet the unique needs of various warehousing operations. The text
emphasizes the dynamic nature of the industry and the necessity for adaptable insurance policies to account for
technological advancements and evolving risks. Key risks, such as those associated with trucking, warehousing,
shipping, and logistics, are mentioned. The importance of business liability insurance and a specific warehouse legal
liability coverage are explained, along with the role of cargo coverage and the need for collaboration with
knowledgeable insurance agents to secure appropriate protection.
Supply Chain Management covers Warehousing and Warehouse Management both of which are part of a Logistics
Management System all working together to achieve a common goal.

Take into consideration a simple coin.

What does it have?

Two sides.

Now consider warehousing and logistics and position each on the two different sides of the same coin.
what does it say?

Warehousing and Logistics: How Important is Synchronization?

Warehousing is a fundamental section of Logistics Management. In essence, it is how businesses accommodates

(storage) and manage the transportation of their respective inventories. Both warehousing and logistics must be
aligned in terms of goals and objectives to generate the most competent outcome on the overall manufacturing
assembly along with outbound logistics undertakings. The alliance involving these two functions must be operated
to all intents and purposes while also upholding high levels of synchronization so as to reap the most efficiency and
effectiveness within the firm, over and above the supply chain as a whole.
THANK YOU