UNIT 1:-

INTRODUCTION TO WAREHOUSE CONCEPT DECISIONS AND OPERATIONS

WAREHOUSE:-
A warehouse is a commercial building for storage of goods. Warehouses are used
by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They
are usually large plain buildings in industrial areas of cities, towns and villages.
They usually have loading docks to load and unload goods from trucks. Sometimes
warehouses are designed for the loading and unloading of goods directly
from railways, airports, or seaports.

IMPORTANCE OF WAREHOUSING (NEED):

 There is a time gap between the production and consumption of products. By bridging
this gap, storage creates time utility.
 There is need for storing the goods so as to make them available to buyers as and
when required.
 Proper and adequate arrangements to retail the goods in perfect condition are essential
for success in marketing.
 Storage enables a firm to carry on production in anticipation of demand in future.
 A warehouse is a place used for the storage or accumulation of goods. It may also be
defined as an establishment that assumes responsibility for the safe custody of goods.
 Warehouses enable the businessmen to carry on production throughout the year and to
sell their products, whenever there is adequate demand.
 Need for warehouse arises also because some goods are produced only in a particular
season but are demanded throughout the year.
TYPE OF WAREHOUSES:

1. Private Warehouses:
The private warehouses are owned and operated by big manufacturers and merchants to
fulfill their own storage needs. Some big business firms which need large storage capacity on
a regular basis and who can afford money, construct and maintain their private warehouses.
2. Public Warehouses:
A public warehouse is a specialized business establishment that provides storage facilities to
the general public for a certain charge. It may be owned and operated by an individual or a
cooperative society. It has to work under a license from the government in accordance with
the prescribed rules and regulations.

3. Bonded Warehouses:
These warehouses are owned, managed and controlled by
government as well as private agencies. Private bonded warehouses have to obtain
licence from the government. Bonded warehouses are used to store imported goods
for which import duty is yet to be paid. In case of imported goods the importers are
not allowed to take away the goods from the ports till such duty is paid.
.

4. Government Warehouses –
These warehouses are owned, managed and controlled
by central or state governments or public corporations or local authorities. Both
government and private enterprises may use these warehouses to store their goods.
Central Warehousing Corporation of India, State Warehousing Corporation and Food
Corporation of India are examples of agencies maintaining government warehouses.

5. Co-operative Warehouses –
These warehouses are owned, managed and controlled
by co-operative societies. They provide warehousing facilities at the most economical rates to
the members of their society.
 CHARACTERISTICS OF AN IDEAL WAREHOUSE:-
ASSIGNMENT 1

(i) Proper Location:

For effective movement of goods and cost saving, warehouses should be established at
places, which are convenient to both the buyer and the seller. These warehouses should be set
up near railway stations, major highways, seaports and airports, where goods can be loaded
and unloaded conveniently.
(ii) Use of Mechanical Appliances:
In the warehouses, mechanical appliances should be used to load and unload the goods. It not
only results in safety of men and material but also reduces wastages in handling goods and
overall handling costs.
(iii) Sufficient Space:
For an ideal warehouse, adequate space should be covered for maximum storage and to keep
the goods in proper order. Each trader (big or small) would want that all of his merchandise
should be accommodated in one warehouse so that he need not travel to different places to
manage the loading and unloading of his goods.
(iv) Proximity to the Market:
The warehouses should be established at a place where market for raw materials and for
selling finished goods is as close as possible. This is the reason that big warehouses are close
to commercial places or bus stands.
(v) Parking Facility:
Parking along road, public places in the urban/suburban areas continue to be a harrowing
experience for the traders who visit from outstations. Hence, in warehouses, proper
arrangements should be made inside the premises to assist quick loading, unloading and safe
parking.
(vi) Safety Measures:
A warehouse, which basically is used to store eatables or perishable goods like bread, butter,
fruits, eggs and vegetables should be equipped with proper cold storage, moisture resistance
etc facilities. Further, efforts should be made to secure the warehouse against possibilities of
theft and damage from heat, rainwater, insects, pests and fire.
(vii) Economical:
The warehouse location, layout, construction and maintenance should be done in such a way
that ensures maximum storage of goods at minimum expense.
(viii) Proper Management:
If warehouses are not managed properly, all the money spent will go waste. Mismanagement
may lead to theft, loss, errors and omissions of goods stored by various traders. Hence, a
strict control over the warehouse is essential on permanent basis.
WAREHOUSE DECISIONS:-

 Site selection :-

The first task is to identify both the general and then the specific warehouse locations. The

general area concerns the broad geography where an active warehouse makes sense from a

service, economic and strategic perspective.

Design:-

The ideal warehouse is a one floor building that eliminates the need to move products

vertically. Warehouse design should facilitate continuous straight product flow through the

building.

 Product mix analysis:-

An important area of analysis is analysis of product that will be distributed through the

warehouse. The design and operations of warehouse are both dependent on the product mix.

 Expansion:-

Future expansion of a warehouse should be considered in the initial planning phase. Building

design should also accommodate future expansion. Floor are, designed to support heavy

movement, can be extended during initial construction to facilitate expansion.

 Material handling:-
Is the basic driver of warehouse design. Warehouse is viewed as a structure designed to

facilitate efficient product flow. It is important to stress that the material handling must be

selected early in the warehouse development process.

 Layout:-

Layout or storage area of a warehouse should be planned to facilitate product flow. Layout

and material handling are integral, special attention must be given to location, number and

design of receiving and loading docks.

 Sizing:-

Each method begins with a projection of the total volume expected to move through the

warehouse during a given period. The projection is used to estimate base and safety stock for

each product to be stocked in the warehouse.

 Safety and maintenance:-

Accident prevention is the concern of warehouse management. A safety program requires

constant examination of workforce procedures and equipment’s to locate and take corrective

actions to eliminate unsafe conditions before accident results.

 ISSUES AFFECTING WAREHOUSING

 Layout and flow of Building

The optimal layout of any warehouse is determined by the type of operations that would be
conducted inside it. Know that older building usually are not every useful to carry out the
modern material flow. Ceiling height, as well as column spacing, can restrict the type of
equipment that can be accommodated in the given space.
 Availability of Skilled Workforce
Buying a building in a remote area is definitely going to be pocket-friendly. However, finding
skilled workforce there can be a task. So moving trained or trainable workforce from a
different location can then be a pricey affair. Therefore, it is recommended to have your
warehouse in the area that will have the adequate supply of mix skill sets of labor so as to
facilitate the operations adequately.
 Intensity of Use
How intense are your operations going to be in the warehouse? However, you must also
consider other factors like emissions, noise levels and the availability of outdoor storage.
These needs will influence the districts that you can target for your future operations.
 Material Handling Capabilities
Another factor that you should consider when choosing a location for the warehouse is the
availability of the handling equipment and staging facilities. In case the primary model is a
truck, you have to check if the facility has the depressed docks.
 Size
This, of course, is an obvious criterion. Your warehouse facility must be capable of
accommodating the inventory and fit in the size of your company. For all startups and new
companies, it is important to ensure that there is enough room around the facility for
expansion.
 Regulations
Before you buy any warehouse facility it is important for you to enquire about all the
regulations and policies that are prevalent in that location. There may be certain locations that
do not allow storage of certain types of goods.
 WAREHOUSING FACILITIES

 Regular production:
Raw materials need to be stored to enable mass production to be carried on continuously.
Sometimes, goods are stored in anticipation of a rise in prices. Warehouses enable
manufacturers to produce goods in anticipation of demand in future.
 Time utility:
A warehouse creates time utility by bringing the time gap between the production and
consumption of goods. It helps in making available the goods whenever required or
demanded by the customers.
 Store of surplus goods:
Basically, a warehouse acts as a store of surplus goods which are not needed immediately.
Goods are often produced in anticipation of demand and need to be preserved properly until
they are demanded by the customers. Goods which are not required immediately can be
stored in a warehouse to meet the demand in future.
 Minimization of risk:
Warehouses provide for the safe custody of goods. Perishable products can be preserved in
cold storage. By keeping their goods in warehouses, businessmen can minimize the loss from
damage, fire, theft etc.
 Packing and grading:
Certain products have to be conditioned or processed to make them fit for human use, e.g.,
coffee, tobacco, etc. A modern warehouse provides facilities for processing, packing,
blending, grading etc., of the goods for the purpose of sale. The prospective buyers can
inspect the goods kept in a warehouse.
 Financing:
Warehouses provide a receipt to the owner of goods for the goods kept in the warehouse. The
owner can borrow money against the security of goods by making an endorsement on the
warehouse receipt.