MMBA24L08 WAREHOUSING FACILITIES AND AUTOMATION MANAGEMENT

UNIT I – INTRODUCTION
Introduction to warehouse-Types of warehouse operation-Why do we hold stock-
Warehouse location – Number of warehouses - Supply chain trends affecting warehouses
- The growth of e-fulfillment and its effect on the warehouse- Specialized warehousing –
Layout and Design –Fluid Flow Model for Efficient Warehousing - Geometry of Slotting
- Design of Fast Pick Area - Units of Handling – Dedicated vs. Shared Warehouses
Warehouse Quing System
Textbooks:
T1.Warehouse management 2nd edition by Gwynne Richards – CILT UK Publication
T2.Warehouse in the Global Supply Chain– Ricardo Manzoni by Springer Publication
Reference Books:
R1.The Handbook of Logistics and Distribution Management 5th edition by Alan Rushton –
CILT UK Publication.
R2.A Supply Chain Logistics Program for Warehouse Management – David E Mulcahy CRC
Press Book
 Introduction to Warehouse
• Definition:

• Warehousing is the process of storing goods in a warehouse for a specific

period, typically before they are shipped to production lines, retailers,
distributors, or end-consumers.

• Purpose:

• It serves as a crucial link in the supply chain, enabling businesses to manage

KEY FUNCTIONS
inventory, •BENEFITS
optimize distribution, and fulfill orders efficiently.
Storage: Providing secure and •Reduced Costs: Optimizing inventory
organized storage for goods. management and distribution can lead to lower
Inventory costs.
Management: Tracking and •Improved Efficiency: Streamlining
managing inventory levels warehouse operations can improve efficiency
accurately. and productivity.
Order Fulfillment: Picking, •Enhanced Customer Experience: Timely
packing, and preparing orders for and accurate order fulfillment can improve
shipment. customer satisfaction.
Distribution: Facilitating the •Increased Flexibility: Warehousing allows
efficient movement of goods to businesses to respond quickly to changing
their final destinations. market demands.
 Types of Warehouse Operations

1. Receiving and Inspection:

• Purpose:

• The initial stage where goods are received, checked for accuracy and damage, and
documented.

• Activities:

• Unloading, verifying against purchase orders, inspecting for damage, and documenting
discrepancies.

2. Put-Away:

• Purpose:

• Efficiently storing incoming goods in designated locations within the warehouse.

• Activities:

• Assigning storage locations, scanning items, and ensuring proper organization.

 Types of Warehouse Operation
3. Inventory Management:

• Purpose:

• Tracking and managing inventory levels to ensure optimal stock levels and
minimize costs.

• Activities:

• Maintaining accurate records, conducting cycle counts, and forecasting demand.

4. Storage:

• Purpose:

• Safely and efficiently storing goods until they are needed for picking or shipping.

• Activities:

• Using various storage methods (shelves, racks, pallets) and ensuring proper
conditions (temperature, humidity)
 Types of Warehouse Operation
5. Order Picking:

• Purpose:

• Locating and retrieving specific items from storage to fulfill customer orders.

• Activities:

• Using picking lists or scanners, identifying items, and gathering them for packing.

6. Packing:

• Purpose:

• Preparing goods for shipment by selecting appropriate packaging materials and

labeling packages.

• Activities:

• Ensuring items are securely packaged, adding shipping labels, and preparing for
transport.
 Types of Warehouse Operation

7. Shipping:

• Purpose: Ensuring goods are shipped on time

and arrive at their destination in good
condition.

• Activities: Scheduling shipments,

coordinating with carriers, and tracking
packages.
 Why do we hold stock

A. To meet the Variation in Production Demand,

B. To cater to Cyclical and Seasonal Demand
C. To take advantage of Economies of Scale in Procurement
D. To take advantage of Price increase and Quantity Discounts,
E. To reduce Transit Cost and Transit Times
F. To support the Long Lead and High demand items,

Holding Inventories help the companies remain INDEPENDENT

 Warehouse location

Parameter Detail
Rent per Sq Ft per month;
Rent / Lease rates Cost of Lease per month
Tax structure;
Tax incentives;
Taxes Local government programs to promote industry segment
Moving population;
Static population;
Availability of labour Cost of people mobility
Cost of Labour for the Skill Skill gap and development cost
Accessibility to highways,
Peak hour traffic,
Traffic Flow Road safety
Proximity to Port, Railway connection Cost and time for inbound and outbound connections
Should be close to the producers, suppliers and markets
To enhance responsiveness,
Market To reduce lead time and transportation cost
Earthquake,
Local environment weather condition, etc
Building availability To shrink or to expand the business as needed
Cost of utilities Electricity, water supplies, etc
 Number of Warehouses (Factors to be considered)
1. Customer Base & Market Demand:
• Proximity to Customers: A strategic warehouse location minimizes transportation costs and
delivery times, crucial for customer satisfaction.
• Market Density: Concentrated customer bases might warrant fewer, larger warehouses, while
dispersed markets could necessitate more, smaller facilities.
• Service Level Expectations: Customers' desired delivery speed and reliability influence the
number and location of warehouses needed to meet those expectations.

2. Inventory & Supply Chain:

• Inventory Volume & Variety: Number of types of goods stored impact warehouse size and
the number of facilities needed.
• Supplier Locations: Proximity to suppliers can reduce transportation costs and lead times,
influencing warehouse placement.
• Transportation Infrastructure: Access to major highways, ports, and other transportation
hubs is essential for efficient inbound and outbound logistics.
• Inventory Turnover Rate: The speed at which inventory is sold and replenished affects
warehouse space requirements and the need for additional facilities
 Number of Warehouses (Factors to be considered)

3. Operational Efficiency & Costs:

• Labor Availability & Costs: The availability of skilled labor and labor costs in different
locations can impact warehouse operations and staffing decisions.
• Warehouse Capacity & Layout: The size and layout of warehouses must be optimized for
efficient storage, retrieval, and handling of goods.
• Technology Integration: Modern warehouse management systems (WMS) and automation
technologies can improve efficiency and reduce the need for multiple facilities.
• Building Costs & Lease Rates: Warehouse costs, including rent or purchase prices, should be
balanced against the benefits of location and operational efficiency.
• Regulatory Environment: Local regulations and zoning laws can impact warehouse location
and operations.
• Scalability and Future Growth: Consider the ability to expand existing warehouses or add
new ones as your business grows.
• Infrastructure: The infrastructure and transportation system surrounding a potential
warehouse location are crucial factors in ensuring an efficient distribution of commodities.
 Supply Chain Trend, affecting Warehouses

SCM Trends Oracle Net-suite

https://www.netsuite.com/portal/resource/articles/
inventory-management/supply-chain-
trends.shtml#:~:text=This%20article%20lays%20out
%20supply,to%20mitigate%20disruption%20and
%20uncertainty.
 Growth of e-fulfillment, affecting Warehouses
• Warehouse Designs to Accommodate New Technology: Warehouses are being restructured to
incorporate automation, robotics, and AI-driven systems, enabling faster and more accurate order
processing.

• Strategic Location: To meet the demands for rapid delivery, warehouses are increasingly being located
closer to urban centers and transportation hubs, refining distribution efficiency.

• Rise of Omnichannel Fulfillment: Warehouses now support an amazing shopping experience across
multiple platforms, requiring them to handle both online and in-store order fulfillment from the same
facility.

• Requirement of Rapid Delivery: The expectation of quick shipping times has led to the development
of more agile warehousing solutions prioritizing speed and efficiency in picking, packing, and shipping.

• Adapting to Changing Consumer Expectations: Warehouses are evolving to meet consumer

demands for more personalized and flexible services, such as same-day delivery and easy returns.

• Parcel Volume Increased: The surge in online shopping has resulted in higher volumes of smaller,
individual parcels, necessitating more efficient sorting and shipping processes.

• Shift Toward Micro-Fulfillment Centers: Small-scale warehouses are emerging in urban areas to meet
the need for hyper-local, rapid order fulfillment, particularly for groceries and other perishables.

• Need for Sustainability: There is a growing emphasis on eco-friendly practices in warehousing,

including energy-efficient designs, waste reduction, and sustainable packaging solutions.
 Specialized Warehousing
Specialized warehousing refers to the practice of tailoring warehouse operations
to cater to specific industry or product requirements. It involves implementing
unique techniques and solutions to optimize efficiency and meet the specific
needs of the goods being stored.
Specialized Warehousing Techniques Benefits
1. Temperature Controlled warehousing o Cater to diverse needs
2. Automated Warehousing o Different Industries and types of goods
3. High Density Warehousing o Optimize Storage and Distribution
4. Distribution Warehousing o Enhance Efficiency and Reduce costs
5. Custom Warehousing Solutions
6. Secure Warehousing Limitations
7. Green Warehousing Additional Investment
8. Specialized Inventory Management Training and Technology
9. Seasonal warehousing Reduce Flexibility
10. E-Commerce Warehousing Slower at times

How to choose a Specialized Warehousing

https://www.hcoinnovations.com/specialized-warehousing-techniques/
Warehouse – Layout overview
Key considerations for Warehouse Design and Layout

• Flow Consideration
• Accessibility Consideration
• Space Consideration
• Throughput Consideration
• Product Specification Consideration
• Financial and Other Considerations
• Scalability to support business growth
• Integrating Technology for Automation and
Tracking
• Safety and Compliance

https://publication.sipmm.edu.sg/key-considerations-warehouse-design-layout/
 Warehouse – Layout
The warehouse can have a U-flow, T-Flow or Straight-line flow operating layout.
U-flow layout:
In a U-flow warehouse layout, the same end of the facility takes care of both
receiving and shipping the goods with the inflow and outflow in the same direction. It
optimizes the routes of the handling equipment and provides more flexibility for future
extensions and modifications.

T-flow warehouse design:

It is a variation of the above model. In warehouses with a T-flow design, receiving
and shipping are located on the same side, but the outflow and inflow are at opposite
ends because the bays are not oriented in the same direction.

Straight-line flow layout:

In a warehouse with a straight-line flow design, the loading bay and the unloading
bay are the areas furthest apart from each other in the whole warehouse, with the rest
of the areas located between them.

The layout or design of the warehouse is a process that requires a lot of

information and the evaluation of numerous possibilities. If the layout
considered turns out to be the most appropriate, the company will benefit from an
Warehouse – Layout U, T and I shaped
 Geometry of Slotting in a Warehouse
Slotting refers to organizing warehouse inventory to maximize the efficiency of the
warehouse, and it can also lower total warehousing operational costs and enhance
inventory management procedures. The primary goal of both macro and micro
slotting is to enhance warehouse efficiency and maximize space utilization while
minimizing the time it takes to complete a task and avoiding mistakes when
identifying items. Different businesses use various methods when slotting their
warehouses. Many companies use inventory product characteristics such as size,
weight, type, order history, stockkeeping units (SKUs), and seasonal forecasts.
MICRO VS. MACRO SLOTTING Benefits of Slotting
 Optimized Storage
There are two categories of slotting: macro
 Faster Picking
and micro.
 Prevents Damages
Macro slotting involves optimizing the layout of  Reduced number of errors
the entire warehouse.  Workload Balancing
 Improved Employee Productivity
Micro-slotting is focused on the precise
positioning of individual items, from the  Efficient Use of Equipment
allocated SKU area to its unique storage  Movement Economy
medium. The main objective of micro-slotting  Improved customer satisfaction
is to ensure the proper positioning of SKUs
along the pick path. The pick path is the path
followed by pickers to undertake warehouse
operations.
 Units of Handling
• A HU is a physical unit consisting of packaging materials (load carriers/packing
material) and the goods contained on/in it. A HU is always a combination of
products and packaging materials.
 Dedicated Vs Shared Warehouse
Feature Shared warehousing Dedicated warehousing

Cost structure Pay-as-you-go, based on actual usage Fixed costs, regardless of space utilization

Resource Shared resources reduce staffing and Full responsibility for all operational costs
allocation equipment expenses

Scalability Highly flexible, scales up or down with Limited by fixed space; expansion requires upgrades
demand

Space utilization Efficient, no need to pay for unused space Full space paid for, even if not fully utilized

Fulfillment speed Benefits from distributed locations for faster Often centralized, which may slow delivery to distant
delivery areas

Control over Less control, as space and staff are shared Full control over inventory, staffing, and processes
operations

Ideal for Brands with seasonal or fluctuating demand Brands with consistent, high-volume demand

Risk level Lower, minimal commitment and financial Higher, requires long-term commitment and higher
risk costs
END OF UNIT 1