Download pdf - Warehouse Mgmt

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    Abhradeep PaulMBA(Agribusiness)

    Final year

  • 8/14/2019 Warehouse Mgmt



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    A warehouse is typically viewed as a place to storeinventory.

    However, in many logistical system designs, the role of the

    warehouse is more properly viewed as a switching facility ascontrasted to a storage facility.

    Storage management is meant for minimizing deterioration

    and spoilage. It is a common practice particularly when

    dealing with materials that tend to deteriorate or obsolete, toissue old material ahead of new material.

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    RECEIVING OF MATERIALS:Receiving is essentially a clerical operation. Because man clerical activities are

    regarded as Routine, however, the importance of the receiving function often isunderrated.

    Most problems or error in a purchasing transaction should come to light during

    receiving operation. If the problem is not detected and corrected during the

    receiving operation the cost to correct the mistake later is always higher.

    RECEIVING PROCEDURE:A typical receiving procedure consists of four steps.

    1. Unloading and checking the shipment.

    2. Unpacking and inspecting the material.

    3. Completion of the receiving report.

    4. Deliver of the material

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    IDENTIFICATION SYSTEM:In a broader sense there are two types of material identification system. These


    A. External Systems

    The two most commonly used external systems are:

    1)The Harmonized Commodity Description and Coding system>It provides a set ofdescriptions and six digit codes for commodity identification, description and

    reporting. It also contains an option for the addition of 4 more digits to provide

    more local detail.

    2) The Export Commodity Control Numbers System> Consists of product numbers

    that take the form of five character alphanumeric code. The system is used

    primarily for security sensitive materials requiring export control.

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    B. Internal system:

    Most firms follow some type of symbolic approach in designing the

    system. Symbolic systems can be either numerical or mnemonic.

    The numerical system typically assigns a 6-10 digit code

    number to each item. The following example illustrates the


    2 137 019 508

    General Generic Subclass Specific item

    Class Class number

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    Different Types of Storage Systems:

    A. Closed System>

    In this system all materials are stored in a closed or controlled area.

    Whenever possible, the general practice is to maintain physical control by

    locking the storage area.

    Material enters and leaves the area only with the accompaniment of an

    authotized document. The system is designed to afford maximum physical security and to

    ensure tight accounting control of inventory material.

    B. Open System>

    Storage facilities are completely open, and any worker has access to anstorage facility.

    In plant using this system, no storerooms as such exists; each material is

    stored as close to its point of use as is physically possible.

    It place less emphasis on the physical security of materials.

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    Materials are stored in bins, on shelves, in racks, on pallets, in tote boxes, and

    so on.

    It also place less emphasis on the accounting control of materials. Materials

    are usually put into production without the use of requisition or a controldocument.

    Materials used in this system should not be subject to pilferage, nor should the

    be easily damaged.

    No perpetual inventory records are kept in an open system. To determine the

    actual usage of a material during a given period , it is necessary to take aphysical count of the material at the end of the period and compare this figure

    with the similar beginning-period figure , adjusted for material receipts during the

    period. Hence accounting charges are determined indirectly rather than directly.

    It is most applicable in situation where a repetitive production operation

    produces standardized products.This system is most likely to function successfully if it is not applied to a large

    no. of items.

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    C. Random-Access Storage System>

    It is a unique type of closed stores systems, used by a relatively small no. of

    large firms.

    In this system no material has a fixed storage location. When an item enters the

    storeroom, it is stored in the first available bin or shelf suitable for its storage

    requirement. When the item is withdrawn from the stores, the storage space is

    available for an other incoming item having similar physical storage requirements.

    All materials thus stored at random locations throughout the warehouse.


    Tight physical control of materials may be more difficult to achieve. Stores clerks seldom

    become familiar with the total stock of any item, simply because they lose the close visualcontact they have with the materials in a conventional system.

    Advantage The system provides great flexibility. The same storage facilities can easilyaccommodate different materials, shifts in inventory mix and an unexpected increase in the

    stock level of an existing material.

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    D. Automated Storage/ Retrieval system(AS/RS)>

    A combination of the random access storage concept, highly sophisticatedstorage/retrieval machines, and a computerized control system has produced this


    The storage facility frequently is a 30-80 ft high rise structure constructed of open

    steel columns. Typically it is configured into storage cubicles of different sizes andutilizes various types of standardized pallets and containers for storage.

    A no. of warehouse stock clerks are replaced with automated storage/retrieval

    machines that are mounted on captive floor rails or on conventional wheels.

    The tall vehicles normally controlled by computer have a lifting platform with a

    shuttle that stores and retrieves palletized loads on both sides.

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    Warehouse Design Criteria :Warehouse design criteria address physical facility characteristics and product


    Three factors to be considered in the design process are:

    (1)the number of stories in the facility,

    (2)height utilization, and

    (3)product flow.

    Number of stories in the facility:

    The ideal warehouse design is limited to a single story so that product does nothave to be moved up and down.

    The use of elevators to move product from one floor to the next requires time

    and energy.

    The elevator is also often a bottleneck in product flow since many material

    handlers are usually competing for a limited number of elevators.

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    Height utilization:

    Regardless of facility size, the design should maximize the usage of the available

    cubic space by allowing for the greatest use of height on each floor.Most warehouses have 20- to 30-foot ceilings (1 foot = 12 inch; 1 inch =

    2.54 cm), although modern automated and high-rise facilities can effectively use

    ceiling heights up to 100 feet.Through the use of racking or other hardware, it should be possible to store

    products up to the building's ceiling.Maximum effective warehouse height is limited by the safe lifting capabilities of

    material-handling equipment, such as forklifts.

    Product flow:

    Warehouse design should also allow for straight product flow through the facilitywhether items are stored or not.

    In general, this means that product should be received at one end of the building,

    stored in the middle, and then shipped from the other end.

    Straight-line product flow minimizes congestion and confusion.

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    Storage Plan

    A warehouse design should consider product characteristics, particularly

    those pertaining to volume, weight, and storage.

    Product volume is the major concern when defining a warehouse storage


    High-volume sales or throughput product should be stored in a location that

    minimizes the distance it is moved, such as near primary aisles and in low

    storage racks.

    Such a location minimizes travel distance and the need for extended lifting.

    Conversely, low-volume product can be assigned locations that are distant

    from primary aisles or higher up in storage racks.

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    A Sample Storage Area

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    Storage Plan

    Similarly, the plan should include a specific strategy for products

    dependent on weight and storage characteristics.

    Relatively heavy items should be assigned to locations low to the

    ground to minimize the effort and risk of heavy lifting.

    Bulky or low-density products require extensive storage volume, so

    open floor space or high-level racks can be used for them.

    On the other hand, smaller items may require storage shelves or


    The integrated storage plan must consider and address the specific

    characteristics of each product.

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    Five basic service benefits are achieved through warehousing:

    1.Spot stockUnder spot stocking, a selected amount of a firm's product line is placed

    or "spot stocked" in a warehouse to fill customer orders during a critical

    marketing period.

    In particular, manufacturers with limited or highly seasonal product lines

    are partial to this service.

    Utilizing warehouse facilities forstock spotting allows inventories to be

    placed in a variety of markets adjacent to key customers just prior to a

    maximum period of seasonal sales.

    Suppliers of agricultural products to farmers often use spot stocking to

    position their products closer to a service-sensitive market during the

    growing season.

    Service Benefits

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    An assortment warehouse stocks product combinations in

    anticipation of customer orders.The assortments may represent multiple products from different

    manufacturers or special assortments as specified by customers.In the first case, forexample, an athletic wholesaler would stock

    products from a number ofclothing suppliers so that customers can be

    offered assortments.

    In the second case, the wholesaler would create a specific teamuniform including shirt, pants, and shoes.


    In a typical mixing situation, truckloads of products are shipped from

    manufacturing plants to warehouses.Each large shipment enjoys the lowest possible transportation rate.Upon arrival at the mixing warehouse, factory shipments are unloaded

    and the desired combination of each product for each customer or

    market is selected.When plants are geographically separated, overall transportation

    charges and warehouse requirements can be reduced by mixing.

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    (4)Production Support>Production support warehousing provides a steady supply of components

    and materials to assembly plants.

    Safety stocks on items purchased from outside vendors may be justified

    because of long lead times or significant variations in usage.

    The operation of a production support warehouse is to supply or "feed"

    processed materials, components, and subassemblies into the assembly

    plant in an economic and timely manner.

    (5)Market Presence>While a market presence benefit may not be so obvious, it is often cited by

    marketing managers as a major advantage of local warehouses.

    The market presence factor is based on the perception or belief that local

    warehouses can be more responsive to customer needs and offer quicker

    delivery than more distant warehouses.

    As a result, it is also thought that a local warehouse will enhance market

    share and potentially increase profitability.

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