LECTURE 2

Warehouse Activities & How it Affects Over-All Supply

Chain,
• Receive goods
• Identify goods
• Dispatch goods to storage
• Hold goods
• Pick goods
• Marshal the shipment
• Dispatch the shipment
• Operate an information system
Receive Goods
• Acceptance of goods from outside transportation or an attached factory

a. Check the goods against an order or bill of lading

b. Check the quantities
c. Check for any transit damage
d. Inspect goods if required
Identify Goods
• Checking goods against description mentioned in ‘Purchase Orders’ or any other
special instruction before receiving of shipment. Inspection if done correctly can save
from many errors than can cost huge amounts to companies. Below factors to consider
for minimizing errors.

– Check for Stock Keeping Unit (SKU) number – Item Code

– With part number – CAT numbers, Reference number
– Quantity – UOM (Unit of Measure)
– Payment Terms
– Shipment Method
– Temperature Sensivity
Dispatch Goods To Storage
• Organizations with big operations have warehouses or subset of different distribution
centers location within the organization premises or at different locations for
dispatching and storing of goods.

– Goods are Sorted (Assigned with Labels and Markings)

– Recording of Put Away Goods
– Record The Location
Hold goods
• Warehouses are meant to protect the goods from external threats for later use, factors
that can compromise warehouse protection are listed below, if not protected or
prepared in advance for the threats, they can impact the business.

– Cold
– Heated
– Explosive
– Climate
– Strong Hold (Racks, Accessibility, Movable)
Pick Goods
• Goods are picked from storage through Fork Lifts, Cranes, Hands, Robotics, Drones
etc.
– Must be Accessible
– Location Records

• Brought to marshalling area

Marshal The Shipment
• All goods for an order are brought together
– Check for missing items
– Check for correct items
– Check for quantities
– Change order information if required
Dispatch The Shipment
• The order is prepared for shipment and loaded on the right vehicle (Cars, Rails, Roads,
Air)

– Protective packaging for shipment

– Documents prepared
– Loaded and secured
Operate an Information System
• Need to know what is in the warehouse
– Quantity on hand
– Quantity received
– Quantity issued
– Location of goods

• Computer based or manual system

WAREHOUSE OPTIONS
• Warehouse decisions are important and require close attention in supply chain
network. It involves several important decisions that helps organizations in
identifying the strategic, tactical and operational needs of a warehouse system to fit
into the overall objectives of a supply chain.
• In a selection amongst the various warehouse options, the objectives must be clearly
defined. Volumes will justify private warehouses while the seasonality will justify
public or contract storage places.
• Strategic decisions on layouts, material-handling systems, and storage schemes are
solely dependent on the objectives, available financial resources, return on
investment and pay back period. These decisions will have a long-term effect and
help in developing a com­petitive advantage.
TYPES OF WAREHOUSE
Warehouse are classified into 3 categories,

• Private Warehouse
• Public Warehouse
• Contract Warehouse
PRIVATE WAREHOUSE
• A private warehouse facility is owned and managed by the same enterprise that owns the
merchandise handled and stored at the facility.
• The actual facility, however, may be owned or leased. The decision as to which strategy best
fits an individual firm is essentially financial. Often it is not possible to find a warehouse for
lease that fits the exact requirements of a firm.
• The major benefits of private warehousing include control, flexibility, cost, and other intangible
benefits. Private warehouses provide more control since the enterprise has absolute decision-
making authority over all activities and priorities in the facility.
• A private warehouse with a firm's name on it may produce customer perceptions of
responsiveness and stability. This perception sometimes provides a firm with a marketing
advantage over other enterprises.
PUBLIC WAREHOUSE
• A public warehouse, in contrast, is operated as an independent business offering a range of
services -such as storage, handling, and transportation- based on a fixed or variable fee. Public
warehouse operators generally offer relatively standardized services to all clients.
• Public Warehouses On the basis of the range of specialized operations performed, public
warehouses are classified as
• General merchandise

• Refrigerated

• Special commodity

• Bonded, and

• Household goods and furniture

CONTRACT WAREHOUSE
• A Contract warehousing combines the best characteristics of both private and public
operations. Contract warehouse operations can provide benefits of expertise, flexibility, and
economies of scale by sharing management, labor, equipment, and information resources
across several clients.
• For Example, agricultural giants that deals in FMCG items mostly join to form a combine WH
for storing of bulk food items.
FACTORS FOR IDEAL WAREHOUSE
• 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.

• Use of Mechanical Appliances:

– Use of mechanical appliances results in safety of men and material but also reduces
wastages in handling goods and overall handling costs.

• Sufficient Space:
– For an ideal warehouse, adequate space should be covered for maximum storage and to
keep the goods in proper order.
FACTORS FOR IDEAL WAREHOUSE
• 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.

• Parking Facility:
– In warehouses, proper arrangements should be made inside the premises to assist quick
loading, unloading and safe parking.

• Safety Measures:
– Efforts should be made to secure the warehouse against possibilities of theft and damage
from heat, rainwater, insects, pests and fire. The use of fire extinguishers, safety
alarms, budgets and round the clock security arrangements should be there to secure
warehouses from unforeseen mis-happenings.
LOCATION FOR WAREHOUSE
• Customer Base

• Supplier Network

• Trade Zones (TZs)

• Proximity to Transportation

• Building Availability and Expandability

• Tax Structures & Incentives

• Environmental Conditions & Restrictions

• Workforce Availability
WAREHOUSE MANAGEMENT PROCESSES
• Receiving.
• Put-away.
• Storage.
• Picking.
• Packing.
• Shipping.
RECEIVING
• Check in incoming items. Verify that you’re receiving the right quantity, in the right
condition, at the right time.
• Acceptance of goods from outside transportation or an attached factory

a. Check the goods against an order or bill of lading

b. Check the quantities
c. Check for any transit damage
d. Inspect goods if required
PUT AWAY
• Move items from the receiving dock to their correct storage locations.

– With appropriate stock keeping unit (SKU) number

– With part number
– Indicate the quantity
STORAGE
• Safely store and logically arrange inventory to enable fast and accurate
picking.
– Sorting of Goods
– Record the location

• Storage is meant to protect the goods

– cold
– heated
– explosive
STORAGE
Pallet
A pallet is a flat, (usually wooden) structure that is used for handling transport, storing goods or transporting
freight.

The standard 48 x 40 GMA pallet was born in the 1960's when General Foods, a large company with a
significant amount of buying power, approached the GMA looking for a better method for shipping their
products.
STORAGE
Pallet Spacing

40 inches 40 inches
2 inches
clearance
Total width required = 42 inches per pallet space
STORAGE
CUBE UTILIZATION
A company wants to store an SKU consisting of 13,000 cartons on pallets
each containing 30 cartons. How many pallet positions are needed if the
pallets are stored three high?

• Now when one pallet position will contain only 2 pallets………?

STORAGE
CUBE UTILIZATION
pallets are stored 3 high
Pallets Pallet Positions
SKU A 4 pallets 2
SKU B 6 pallets 2
SKU C 14 pallets 5
SKU D 8 pallets 3
SKU E 5 pallets 2
37 pallets 14
Utilization
= 37 / (14 x 3) x 100%
= 88%
PICKING
• Collect the items needed to fulfill sales orders.

– Goods are picked from storage

– Brought to packaging area

 Sorting of Goods
 Record the location
PACKING
• Prepare the picked items for shipment. They must be safely packed into the correct
packaging with an accurate packing slip.

• All goods for an order are brought together

– Check for missing items
– Check for correct items
– Change order information if required
SHIPPING
• Send out the finalized sales orders, ensuring that they are on the right vehicle, at the
right time, with the correct documentation, so customers receive their orders on time.

• The order is prepared for shipment and loaded on the right vehicle
– protective packaging for shipment
– documents prepared
– loaded and secured
ROLE OF PACKAGING IN
WAREHOUSING
• Packaging plays an important role in protecting the items from various factors as
mentioned below,

• Protection from damage from normal functions of warehouse and distribution

• Containment Ability to resist leakage, spilling, tampering, handling, and theft
• Information Reference to contents, control markings, brand image, and
identification.
• Efficiency of handling, storing, distributing, and opening and closing
UNITIZATION
• The unit load size should fit all modes of materials handling equipment and
transportation.
• The unit load should be designed to optimize space utilization whether when keeping
on machine or in WH,
• Stacking patterns impact the dynamics of load stability and potential for damage.
• The weight of the unit load must be in alignment with materials handling systems
Packaging and unitization equipment should be reusable/returnable or recyclable
• Unitization Examples
– Boxes/Crates/ Bundles/Pallets/Barrels/Steel/Baskets/Containers