Warehouse

& Storage
Techniques
 “Warehousing and storage is an act of storing and assorting the finished
goods so as to create maximum time utility at minimum cost”
The need for storage arises both for raw materials as well as
finished products
WAREHOUSING STORAGE involves proper management for preserving goods from their
production or purchase to actual use.
AND STORAGE When this storage is done on a large scale and in a specified manner it is
called WAREHOUSING.
Nowadays, many private firms are turning to distribution
centers rather than constructing the warehouses.
WAREHOUSE
MANAGEMENT

Is a key part of the supply chain.

AIMS: To control the movement and storage of materials within a warehouse
The systems also direct and optimize stock put away based on real-time information
about the status of bin utilization.
A WMS monitors the progress of products through the warehouses.
It involves the physical warehouse infrastructure, tracking systems, and
communication between product stations.
 Another definition-
“warehousing is the set of activities that are involved in receiving
and storing of goods and preparing them for
reshipment “
Warehousing is not only concerned with storage facilities but also involved in
DEFINITION AND ITS various other activities like –
FUNCTIONS Receiving,
identifying,
Holding
Assembling and preparingto meet the demand
 FUNCTIONS OF WAREHOUSING
1. Receiving of goods:-
The basic important function of warehousing
Accepts and assumes the responsibility to deliver the goods
Issues the receipts of the goods
2. Preparations of records:-
The warehouse keeper checks the items and prepares the records
Records are maintained properly to avoid problems a t the time
of delivery
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• Identification:-
• All the items are marked separately
• Code numbers/tags attached for identification
• Identification helps to separate goods of different
firms easily
• Storing:-
• Major function of warehousing
• Goods are kept safely in the warehouse
• Helps in the proper protection of goods e.g.
food crops, fruits, vegetables, etc.

• -continue
• Packing:-
• Provided by the warehouse keeper if the
owner requires such facilities
• Packaging is done in a reasonable way according
to size and quantity of goods
• Information about receipts:-
• The warehouse keeper checks and informs about
the goods to the concerned department

• -continue
• Breaking of bulks:-
• Generally, goods delivered in bulk
• If the owner wants in small quantities,
keepers' packs according to the requirements of
customer
• Search the goods:-
• Warehouse keeper searches efficiently and
provides the goods to the owner, whenever he
demands
• Delivery of goods:-
• Documents are checked and prepared and
• Goods are loaded over transport

continue
ECONOMIC AND
SERVICE
BENEFITS OF
WAREHOUSING
 ECONOMIC AND SERVICE BENEFIT OF
WAREHOUSING

Economic Benefits- Consolidation, Break bulk, Cross Dock,

processing postponement, stock piling[seasonal storage]
Service Benefits - spot stocking, Assortment, mixing,
production support, market presence
ECONOMIC
BENEFITS
 CONSOLIDATION
Plant A
[Product A
for Customer
X]

Plant B Customer X
[Product B for Consolidation [Product A+
Customer X] warehouse Product B+
Product C]

Plant C
[Product C for
Customer X]
 BREAK BULK
WAREHOUSE
Customer
X
Plant A
[Product A
for Break bulk Customer
Customers warehouse Y
X+Y+Z]
Customer
Z
 CROSS DOCKING in
WAREHOUSE
Customer W
Plant A [A+B+C]
[Product
A] For
W, X, Z
Customer X
Plant B Cross Dock [A+B]
[Product B] warehouse
For
Customer Y
W,X,Y,Z
[B+C]
Plant C
[Product C]
For
Customer Z
W, Y, Z
A+ C
 •A logistics activity that attempts to
Cross Docking reduce costs and total lead time.

•Breaks down received items on the loading

dock and immediately matches them with
outgoing shipment requirements, instead of
stocking the items in warehouse locations
and returning to pick for orders at a later
time.
Cross Docking

•Eliminates the need to place

inventory in storage.

•The idea is to transfer incoming

shipments directly to outgoing
trailers without storing them in
between.
Cross Docking…
•In a traditional warehouse, goods are
received from vendors and stored in
devices like racks or shelving.

•When a customer (e.g., the consumer

or perhaps a retail outlet) requests an
item, workers pick it from the shelves
and send it to the destination.
 Crossdocking

B
Crossdock

A
A A
Facility

B A
B
• Receiving
• Staging (<24hr)
B Stores
• Shipping
Suppliers
4
 Traditional Distribution

B
A
A A
Warehouse

B A
B
• Receiving
• Putaway
B Stores
• Storage
• Replenishment
Suppliers • Picking 5
• Shipping
 Cross Docking…
(classification)

• In pre-distribution cross-docking, the customer is assigned before the

shipment leaves the vendor, so it arrives at the cross-dock bagged and
tagged for transfer.

• In post-distribution cross-docking, the cross-dock itself allocates

material to its stores.
 Economic Benefits:
Processing/
Postponement

Warehouses can also be used to postpone, or

delay, production by performing processing and
light manufacturing activities.

A warehouse with packaging or labeling capability

allows postponement of final production until
actual demand is known.

Once a specific customer order is received, the

warehouse can complete final processing by
adding the label and finalizing the packaging
 Economic Benefits:
Processing/
Postponement
•It provides two economic benefits.
1. First, the risk is minimized because final
packaging is not completed until an order for a
specific label and package has been received.
2. The required level of total inventory can be
reduced by using the basic product for a
variety of labeling and packaging
configurations.

• The combination of lower risk and inventory

level often reduces total system cost even if
the cost of packaging at the warehouse is
more expensive than it would be at the
manufacturer’s facility.
 Economic Benefits:
Stockpiling
• The direct economic benefit of this
warehousing is secondary to the fact that
seasonal storage is essential to selected
businesses.
For Example:
•A lawn manufacturer will Make its stock from
November, will pile it up in a warehouse, and
then Will be able to launch network-wide in the
required time.
SERVICE BENEFITS
 Plant A Customer X
Products
TRANSMIT MIXING
WAREHOUSE
[Product A]
A+ B+ C

In transit mixing
Warehouse
[transit mixing point,
mix & make product
C]
Customer Y
Plant B Products
[Product B] A+B
 MANUFACTURING WAREHOUSE

Vendor
C [part Assembly Line X
C]

Vendor A
Manufacturing
[part A] Assembly Line Y
Warehouse

Vendor
Assembly Line Z
B [part
B]
 Service Benefits:
Spot Stock
• Under this concept, a selected amount
of firm’s product line is placed or
‘spot stocked’ in a warehouse to fill
customer orders during a critical
marketing period.

• Suppliers of agricultural products to

farmers often use spot stocking to
position their products closer to a
service-sensitive market during the
growing season.

• Following the sales season, the

remaining inventory is withdrawn to
a central warehouse.
 Service Benefits: Assortment
• Assortment warehouse which may be utilized by a manufacturer,
wholesaler, or retailer- to stock 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, for example, an athletic wholesaler would stock products
from a number of clothing suppliers so that customers can be offered the
required assortment.
•In the second case, the wholesaler would create a specific team uniform
including shirts, pants, and shoes.
 • Production support warehousing
Service Benefits: provides a steady supply of
Production components and materials to
assembly plants.
Support
• Safety stocks on items purchased
from outside vendors may be justified
because of long lead times or
significant variations in usage.
 Service Benefits: Market Presence
• 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.
Warehouse Option- A Strategic Decision
 WAREHOUSE OPTIONS
1. Private Warehouses
• It refers to the entire facility under the financial and administrative control of the firm.
The firm owning the product operates these warehouses.
It may include a production-oriented captive warehouse, or a distribution warehouse located in the
field for customer service.
✔ Owned or leased by the product owner
✔ Control is fully with the product owner
✔ Changes can be made to integrate the warehouse with rest of the logistical system
✔ Provides market presence to the product owner
✔ There is no profit to be added to the cost
 Private Warehouses

• Private Warehouses: Benefits

•Flexibility
•Full management control Lower operating
cost
•A private warehouse facility can be planned close to the markets to
provide efficient and effective service to the customer.
 Private Warehouses

• Private warehouses are attractive propositions under certain

circumstances such as:
• Product-specific material handling and storing facilities are required
which are not available with the other two options.
• Volumes handled are high ensuring full capacity utilization and
benefits of scale economics.
• High degree of control over the operations is required.
 2. Public Warehouses
• The firms having warehousing space, storage facility, and material handling equipment, for the most general usage, provide
these services.
Extensively used in logistics systems.
Designed for handling the most general packaged products or commodities, which do not require specialized storage
or handling arrangement. Such as food grains, paper rolls, bulk material (cement, fertilizers), furniture, chemicals, etc
✔ Available to companies on hire
✔ Overheads get distributed over a large customer base
✔ As warehousing is their core business public warehouses offer expertise in management
✔ Flexibility of location
✔ Significant scale economies, several users and resultant volume, benefits in transportation costs
 •Public Warehouses: Benefits
2. Public A public warehouse provides financial flexibility.
•A newly formed firm desirous of expanding its distribution
Warehouses network need not invest in developing a private warehouse.
•The option is to hire some space in a public warehouse and
use the money for other productive activities.
•It allows flexibility of location.
•Due to geographical changes in consumption centers, a firm
can close a facility in one market and open at other place
without any financial losses.
 •Public Warehouses: Disadvantages
2. Public • The greatest disadvantage is absence
of control on operations.
Warehouses • As a product specific facility is not
available, product damages during
storage and handling may be on a
higher side.
• The speed of order fulfillment is slow
resulting in a lower level of customer
service.
 3. Contract warehouses

3. Contract warehouses
• These are the product-specific warehouse facilities acquired for use for a specific period against fixed
charges.
• A contract warehouse can provide the benefits of both private and public warehouses.
• The resources such as labor, material handling equipment, storage arrangement, communication equipment
can be used on sharing basis with depositors from the same industry to economize on operating cost

✔ Contract warehouse operators take over logistics responsibility from manufacturing company

✔ Long term relationship and customized service

✔ Expertise of management
✔ Shared resources with several clients
 Warehouse Option- A Strategic Decision
Private Public Contract
Investment High None Very Little

Flexibility in Material handling, Location Location

.
storage & throughput
planning
Cost per unit Inversely related to Low Inversely related to
stored volumes volumes
Level of High Low Medium
controls
Adequacy of High Low High
goods stored
Risk Due to change in Minimal Minimal
market demand
 FACTORS TO BE CONSIDERED

It is desirable to maximize the following

factors-
1. Space utilization
2. Equipment utilization
3. Labor utilization
4. Accessibility of all materials
5. Protection of all materials
FACTORS FOR IDEAL WAREHOUSES
Convenient Location
Availability Of Mechanical Appliances To Load &
Unload Goods
Adequate Space
Cold Storage Facilities
Proper Arrangement for Protection
Sufficient Parking Space
Round the Clock Security Arrangement
Latest Fire Fighting Equipment's
While designing a warehouse, a manager ought to keep
in mind these elements

Land and Building

Management and staff
Operating methods and Procedures
Equipment
 WAREHOUSE
LOCATION
Centralized warehouse
Decentralized warehouse
 CENTRALISED
WAREHOUSING
Benefits:
1. It improves operating efficiency and inventory control is felt easier
and effective.
2. There is no need to carry large stock and there are no dangers of
stock outs resulting in low level inventories.
3. Transport facilities are optimally used as routing and scheduling
becomes handy.
4. The firm is better placed to meet the demand fluctuations
from different market segments at relatively short notice.

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Drawbacks:

1. It results in loss of customer service due to

spatial considerations and delays are caused.
2. The firm is deprived of its potential market share.
3. It results in heavy transport costs unless each
delivery is sizeable as the carrier has to cover long
distance.
 DECENTREALISE WAREHOUSE
Benefits:
1. The firm serves the customers better positioning the inventory
in their proximity. This is the result of maximum time utility
created by it.
2. The firm is likely to effect savings in freight charges
because of bulk handling
3. It facilitates product movement by block rates
 Drawbacks:
1. It adds to the administrative cost as the firm is to manage a
number of warehouses distantly located with the acute problem
of maintaining high level efficiency

2. It calls for heavy investment as the firm is to hold inventory at

different locations in larger lots.