Logistics and Supply Chain Management 22MBA31

Module - 3
Strategic Logistic Plan
Strategic Logistic plan, Operating objectives of logistics planning, Flow of logistics planning,
Developing Logistic strategy, Logistics System Design and Administration, logistic environment
assessment, Pricing in logistics, Warehousing– scope, primary functions. Efficient Warehouse
Management System, Types of Warehouses.

Strategic Logistic Plan:

Strategic logistics plans define how a business plans to deliver products or services to customers.
Some businesses don't require as many steps in product delivery while others have many stages
and steps. Address logistics in a methodical way that allows your business to scale operations or
increase profitability.
Importance of Strategic Logistic Plan:
The importance of a Strategic Logistics Plan lies in its ability to enhance the overall efficiency,
effectiveness, and competitiveness of an organization's supply chain. Here are key reasons why
having a well-developed strategic logistics plan is crucial:
Cost Optimization:
 Identifies opportunities for cost reduction and operational efficiency.
 Enables better resource utilization through streamlined processes and improved
coordination.
Improved Customer Service:
 Enhances delivery times and reliability, leading to higher customer satisfaction.
 Allows for better management of inventory to meet customer demand and prevent stock
outs.
Flexibility and Responsiveness:
 Provides the framework for a flexible supply chain that can adapt to changing market
conditions.
 Enables the organization to respond quickly to disruptions and uncertainties in the business
environment.
Risk Management:
 Identifies and mitigates risks in the supply chain, such as supplier issues, transportation
delays, or natural disasters.

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 Develops contingency plans to minimize the impact of unforeseen events.

Competitive Advantage:
 Differentiates the organization from competitors by providing superior logistics
capabilities.
 Allows for the development of unique value propositions, such as faster delivery or lower
costs.
Efficient Resource Utilization:
 Maximizes the use of available resources, including transportation, warehousing, and
human capital.
 Avoids overstocking or understocking by optimizing inventory levels.
Technology Integration:
 Leverages technology to improve visibility, track shipments, and enhance overall
communication within the supply chain.
 Enables the organization to stay competitive in a technologically advancing business
environment.
Environmental Sustainability:
 Incorporates eco-friendly practices, reducing the environmental impact of logistics
operations.
 Aligns with corporate social responsibility goals and enhances the organization's
reputation.
Continuous Improvement:
 Establishes a framework for regular performance measurement and feedback.
 Promotes a culture of continuous improvement in logistics processes.

Operating objectives of logistics planning

The operating objectives of logistics planning are focused on the day-to-day activities and
processes that ensure the smooth functioning of the supply chain. These objectives are essential
for meeting customer demands, minimizing costs, and maintaining an efficient and responsive
logistics operation. Here are some common operating objectives in logistics planning:
1. Timely Delivery: Ensure that products are delivered to customers or distribution centers on
time, meeting promised delivery schedules and service level agreements.
2. Order Accuracy: Minimize errors in order fulfillment to enhance customer satisfaction and
reduce the need for returns or corrections.

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3. Optimal Inventory Levels: Balance inventory levels to prevent stock outs and overstock
situations, minimizing holding costs while ensuring product availability.
4. Cost Efficiency: Streamline logistics processes to minimize overall costs, including
transportation, warehousing, and order fulfillment costs.
5. Efficient Transportation: Optimize transportation routes, modes, and carriers to reduce transit
times, transportation costs, and environmental impact.
6. Warehouse Efficiency: Maximize the efficiency of warehouse operations by optimizing layout,
implementing automation, and improving order picking processes.
7. Supplier and Vendor Performance: Monitor and manage the performance of suppliers and
vendors to ensure a reliable and efficient supply chain.
8. Real-Time Visibility: Implement technologies and systems that provide real-time visibility into
the movement of goods, allowing for better tracking and decision-making.
9. Communication and Collaboration: Facilitate effective communication and collaboration
between different stakeholders in the supply chain, including suppliers, manufacturers,
distributors, and customers.
10. Quality Management: Implement quality control measures to ensure that products meet
specified standards and requirements throughout the supply chain.
11. Adaptability and Flexibility: Build flexibility into the supply chain to adapt to changes in
demand, market conditions, and unexpected disruptions.
12. Risk Management: Identify and mitigate risks associated with the supply chain, including
supplier issues, transportation delays, and other potential disruptions.
13. Regulatory Compliance: Ensure compliance with local and international regulations
governing transportation, customs, and other logistical activities.
14. Sustainability Practices: Integrate environmentally sustainable practices to reduce the
ecological impact of logistics operations.
15. Customer Service Excellence: Provide exceptional customer service by meeting or exceeding
customer expectations for timely delivery, order accuracy, and responsiveness.
These operating objectives collectively contribute to the overall success of an organization's
logistics function. They help create a well-functioning supply chain that not only meets the
demands of customers but also operates efficiently and cost-effectively. Regular monitoring and
adjustments to these objectives are essential to adapt to changes in the business environment and
continuously improve logistics operations.

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Flow of Logistical Planning:

Logistical planning is a crucial aspect of supply chain management that involves the coordination
and optimization of various activities to ensure the efficient flow of goods and services from the
point of origin to the point of consumption. The flow of logistical planning typically involves
several key stages:
1. Demand Forecasting:
 Assessing and predicting customer demand for products and services.
 Utilizing historical data, market trends, and other factors to estimate future demand.
2. Inventory Planning:
 Determining optimal inventory levels to meet anticipated demand.
 Balancing the costs of holding inventory against the costs of potential stockouts.
3. Procurement:
 Identifying and selecting suppliers.
 Negotiating contracts and terms.
 Placing orders and managing relationships with suppliers.
4. Production Planning:
 Coordinating production schedules based on demand forecasts and available
resources.
 Optimizing manufacturing processes for efficiency and cost-effectiveness.
5. Transportation Planning:
 Selecting the most suitable modes of transportation (road, rail, air, sea) for moving
goods.
 Planning routes and optimizing logistics networks for timely and cost-effective
delivery.
6. Warehousing and Storage:
 Selecting appropriate warehouse locations.
 Designing warehouse layouts for efficient storage and retrieval.
 Implementing inventory management systems to track stock levels.

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7. Order Fulfillment:
 Processing customer orders promptly and accurately.
 Picking, packing, and shipping products efficiently.
 Utilizing technology, such as warehouse management systems, to streamline order
fulfillment processes.
8. Distribution Network Design:
 Designing an effective distribution network based on the geography of demand.
 Considering factors like the location of warehouses, transportation routes, and
delivery nodes.
9. Reverse Logistics:
 Planning for the reverse flow of goods, such as returns and recycling.
 Managing the disposal or refurbishment of products.
10. Technology Integration:
 Implementing and integrating technology solutions such as Enterprise Resource
Planning (ERP), Transportation Management Systems (TMS), and Warehouse
Management Systems (WMS) to enhance visibility and control.
11. Risk Management:
 Identifying and assessing potential risks in the supply chain.
 Developing contingency plans to address disruptions, such as natural disasters or
geopolitical events.
12. Continuous Improvement:
 Monitoring key performance indicators (KPIs) to evaluate the efficiency of
logistical processes.
 Implementing continuous improvement initiatives to enhance overall supply chain
performance.

Developing Logistical Strategy

1. Understand Business Objectives: Begin by understanding the overall goals and
objectives of the organization. The logistics strategy should align with and support these
broader business goals.

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2. Conduct a SWOT Analysis: Evaluate the current state of the logistics function by
conducting a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). Identify
internal strengths and weaknesses as well as external opportunities and threats.
3. Define Logistics Objectives: Clearly articulate the specific objectives the logistics
strategy aims to achieve. These could include cost reduction, improved service levels,
enhanced flexibility, or sustainability goals.
4. Market Analysis and Demand Forecasting: Analyze market trends and forecast demand
to anticipate logistics requirements. Understand customer needs and market dynamics that
could impact logistics operations.
5. Supplier and Vendor Management: Develop strategies for managing relationships with
suppliers and vendors. Consider factors such as reliability, cost, and collaboration to ensure
a smooth and efficient supply chain.
6. Transportation Strategy: Develop a transportation strategy that considers the most cost-
effective and efficient modes of transportation, optimal routes, and technologies for real-
time visibility.
7. Warehouse and Distribution Strategy: Plan the layout and operations of warehouses to
maximize efficiency. Consider automation, order fulfillment processes, and inventory
management strategies.
8. Information Technology Integration: Integrate technology systems to enhance real-time
visibility, data analytics, and communication within the supply chain. Consider
technologies such as RFID, GPS, and advanced planning systems.
9. Regulatory Compliance: Ensure compliance with local and international regulations
governing logistics activities, including customs, transportation, and safety standards.
10. Sustainability Initiatives: Incorporate environmentally sustainable practices to minimize
the ecological impact of logistics operations. Consider eco-friendly packaging, energy-
efficient transportation, and waste reduction.
11. Risk Management: Identify potential risks in the supply chain and develop contingency
plans to mitigate the impact of disruptions. This may include natural disasters, geopolitical
events, or supply chain interruptions.
12. Performance Measurement: Establish key performance indicators (KPIs) to measure
logistics performance. Monitor and analyze these KPIs regularly to identify areas for
improvement.
13. Continuous Improvement: Foster a culture of continuous improvement within the
logistics function. Encourage feedback, regularly review processes, and implement
changes to optimize logistics operations.

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14. Customer Service Excellence: Implement strategies to meet or exceed customer

expectations for timely delivery, order accuracy, and overall responsiveness. Consider
customer feedback as a valuable input for improvement.
15. Documentation and Reporting: Maintain accurate and up-to-date documentation for all
logistics activities. Generate regular reports to assess performance against objectives and
identify areas for improvement.
16. Training and Development: Provide training and development opportunities for logistics
personnel. Ensure that the team is equipped with the necessary skills and knowledge to
execute the logistics strategy effectively.
17. Communication and Collaboration: Foster effective communication and collaboration
between different stakeholders in the supply chain. This includes internal teams, suppliers,
vendors, and customers.
18. Review and Update: Regularly review and update the logistics strategy to adapt to
changes in the business environment, technology advancements, and market dynamics.
Ensure that the strategy remains aligned with the overall business goals.

Logistics System Design & Administration:

Logistics system design and administration involve the planning, implementation, and
management of processes and structures within the logistics and supply chain domain. It
encompasses various elements, including network design, technology integration, process
optimization, and administrative functions. Here's an overview of key aspects of logistics system
design and administration:
Logistics System Design:
1. Network Design:
 Determine the optimal configuration of the logistics network, including the number
and location of facilities such as warehouses, distribution centers, and
transportation hubs.
2. Facility Layout and Design:
 Plan the layout and design of warehouses and distribution centers for efficient
material flow, storage, and order fulfillment.
3. Transportation System Design:
 Design the transportation system to optimize routes, modes of transport, and carrier
selection for cost-effective and timely delivery.

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4. Technology Integration:
 Integrate technology solutions such as Warehouse Management Systems (WMS),
Transportation Management Systems (TMS), and Radio-frequency identification
(RFID) for enhanced visibility, automation, and data analytics.
5. Inventory Management:
 Develop strategies for inventory control, including determining optimal stock
levels, order quantities, and safety stock considerations.
6. Order Fulfillment Processes:
 Design and optimize order picking, packing, and shipping processes to minimize
lead times and improve overall order fulfillment efficiency.
7. Collaboration with Suppliers and Vendors:
 Establish collaborative relationships with suppliers to improve the efficiency of
inbound logistics and reduce lead times.
8. Sustainability Initiatives:
 Integrate environmentally sustainable practices into the logistics system design,
such as optimizing transportation routes and using eco-friendly packaging.

Logistics System Administration:

1. Administrative Structure:
 Establish an administrative structure that defines roles, responsibilities, and
reporting relationships within the logistics function.
2. Regulatory Compliance:
 Ensure compliance with local and international regulations governing logistics
operations, including customs, safety standards, and transportation regulations.
3. Risk Management:
 Develop and implement strategies for identifying, assessing, and mitigating risks
within the logistics system, including disruptions to the supply chain.
4. Performance Monitoring:
 Implement Key Performance Indicators (KPIs) to monitor and evaluate the
performance of logistics processes and service providers.

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5. Documentation and Record Keeping:

 Maintain accurate and up-to-date documentation for all logistics activities,
including shipping records, inventory reports, and compliance documentation.
6. Communication and Collaboration:
 Facilitate effective communication and collaboration between different
stakeholders in the supply chain, including internal teams, suppliers, vendors, and
customers.
7. Training and Development:
 Provide ongoing training and development opportunities for logistics personnel to
ensure they have the necessary skills and knowledge to perform their roles
effectively.
8. Continuous Improvement:
 Foster a culture of continuous improvement by regularly reviewing processes,
analyzing performance data, and implementing changes to optimize logistics
operations.
9. Technology Maintenance and Upgrades:
 Ensure the regular maintenance and upgrading of technology systems to keep them
aligned with industry standards and business requirements.
10. Budgeting and Cost Control:
 Develop and manage budgets for logistics operations, ensuring that costs are
controlled while maintaining service levels.
11. Customer Service Excellence:
 Implement strategies to enhance customer service, including timely
communication, accurate order processing, and responsiveness to customer needs.

12. Security Measures:

 Implement security measures to safeguard against theft, damage, or unauthorized
access to goods within the logistics system.
Logistics system design and administration are ongoing processes that require a holistic and
dynamic approach to adapt to changes in the business environment and technology landscape.
Regular evaluations, adjustments, and a focus on continuous improvement are essential for the
effective and efficient functioning of logistics systems.

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Logistic Environment Assessment:

A logistic environment assessment involves evaluating the external factors that can impact the
design, efficiency, and overall performance of a logistics system. This assessment is crucial for
organizations to adapt and respond effectively to changes in the business environment. Here are
key elements to consider in a logistics environment assessment:
1. Economic Factors:
 Economic Conditions: Assess the overall economic health of regions where the
logistics system operates. Economic fluctuations can impact consumer demand,
transportation costs, and overall business operations.
2. Regulatory and Legal Factors:
 Customs and Trade Regulations: Stay informed about international trade
regulations, tariffs, and customs procedures that may affect cross-border shipments.
 Environmental Regulations: Consider regulations related to emissions, waste
disposal, and sustainable practices, as they can influence logistics operations.
3. Technological Factors:
 Emerging Technologies: Evaluate the impact of emerging technologies such as
automation, artificial intelligence, and IoT on logistics processes. Adopting new
technologies can enhance efficiency and visibility in the supply chain.
4. Social and Cultural Factors:
 Consumer Behavior: Understand consumer preferences and behavior, as they
influence demand patterns and distribution strategies.
 Cultural Considerations: Account for cultural differences in various regions,
especially when dealing with international logistics.
5. Political Factors:
 Geopolitical Stability: Assess the geopolitical situation in regions where logistics
operations are conducted, as political instability can affect transportation routes and
trade relations.
 Government Policies: Monitor government policies related to trade, taxation, and
infrastructure development that may impact logistics.
6. Environmental Factors:
 Climate and Weather Conditions: Consider the impact of weather conditions on
transportation and storage. Extreme weather events can disrupt supply chains.

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 Sustainability Practices: Evaluate the organization's commitment to

environmentally friendly practices and compliance with sustainability standards.
7. Market Conditions:
 Competitive Landscape: Analyze the competitive environment, including the
strategies and capabilities of other logistics providers.
 Market Trends: Stay abreast of market trends, such as e-commerce growth,
shifting consumer preferences, and industry innovations.
8. Infrastructure:
 Transportation Infrastructure: Evaluate the quality and reliability of
transportation networks, including roads, ports, and airports.
 Technology Infrastructure: Assess the availability and reliability of technology
infrastructure for communication and information systems.
9. Supplier and Partner Relations:
 Supplier Stability: Evaluate the stability and reliability of key suppliers, as
disruptions in the supplier network can impact the entire supply chain.
 Collaborative Partnerships: Assess the strength and effectiveness of partnerships
with logistics service providers, carriers, and other stakeholders.
10. Labor Market:
 Skilled Workforce: Evaluate the availability of skilled labor for various logistics
functions, including warehouse operations, transportation, and technology
management.
 Labor Regulations: Consider labor laws and regulations that may affect workforce
management and labor costs.
11. Security Considerations:
 Supply Chain Security: Assess and implement measures to enhance the security
of the supply chain against risks such as theft, fraud, and terrorism.
 Data Security: Ensure the security of information systems and data, especially in
an era of increased reliance on digital technologies.
12. Global Events and Disruptions:
 Pandemics and Health Crises: Consider the potential impact of global health
crises on logistics operations and supply chain resilience.

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 Natural Disasters: Assess vulnerability to natural disasters and develop

contingency plans for supply chain disruptions.

Pricing in logistics:
Pricing in logistics involves determining the costs associated with the movement and storage of
goods and setting prices for the services provided by logistics providers. It is a critical aspect of
supply chain management and plays a crucial role in the overall profitability of businesses involved
in the movement of goods. Here are key considerations and factors influencing pricing in logistics:
1. Cost Components:
 Transportation Costs: Including fuel, maintenance, labor, and equipment costs
associated with the movement of goods.
 Warehousing Costs: Including storage space, labor, equipment, and technology
for inventory management.
 Handling and Packaging Costs: Costs related to the handling, sorting, and
packaging of goods for transportation.
 Technology Costs: Expenses associated with logistics information systems,
tracking technologies, and communication tools.
2. Mode of Transportation:
 Shipping Method: Different transportation modes (road, rail, air, sea) have
varying costs. Airfreight is generally more expensive but faster, while sea freight
may be more cost-effective for large shipments but slower.
3. Distance and Destination:
 Shipping Distance: Longer distances typically incur higher transportation costs.
 Destination and Accessibility: Remote or hard-to-reach locations may involve
additional costs.
4. Service Level and Speed:
 Expedited Services: Faster delivery options often come with higher costs.
 Standard vs. Premium Services: Offering different service levels with
corresponding pricing structures based on delivery speed and reliability.

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5. Volume and Frequency:

 Volume Discounts: Logistics providers may offer discounts for high-volume
shipments.
 Frequency Discounts: Consistent and frequent shipments may lead to negotiated
lower rates.
6. Seasonal and Peak Demand:
 Seasonal Fluctuations: Prices may vary based on seasonal demand fluctuations,
especially in industries with peak seasons.
 Peak Periods: Higher demand during certain times may result in increased pricing.
7. Customs and Duties:
 International Trade Costs: Import and export duties, taxes, and customs clearance
fees can significantly impact pricing.
8. Technology and Innovation:
 Automation and Efficiency: Investments in technology and automation can
impact pricing but may result in cost savings over the long term.
9. Market Conditions:
 Competitive Pricing: Prices are often influenced by what competitors in the
market are offering.
 Customer Demand: Adjusting prices based on customer demand and expectations.
10. Contractual Agreements:
 Long-Term Contracts: Establishing long-term partnerships and contracts may
lead to more favorable pricing terms.
 Negotiation: Negotiating terms and prices based on the specific needs and
requirements of both parties.
11. Risk Management:
 Insurance Costs: Pricing may include insurance costs to mitigate risks associated
with loss, damage, or theft during transportation.
12. Value-Added Services:
 Additional Services: Offering value-added services such as real-time tracking,
customization, or specialized handling may impact pricing.

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Warehouse:
Warehousing is the process of storing physical inventory for sale or distribution. Warehouses are
used by all different types of businesses that need to temporarily store products in bulk before
either shipping them to other locations or individually to end consumers.
A warehouse is a dedicated building or space used for the storage, handling, and distribution of
goods or products. It is designed to provide a secure and organized environment for storing
inventory until it is needed for further processing or shipment. Warehouses vary in size and layout,
ranging from small storage facilities to large distribution centres. They are a critical component of
the supply chain, serving as a hub for inventory management, order fulfilment, and logistics
activities. Warehouses typically have features such as shelving, racks, loading docks, and
equipment like forklifts to facilitate efficient storage and movement of goods. They may also
incorporate technology such as inventory management systems, barcode scanners, and automated
material handling systems to enhance operations and ensure accurate inventory tracking.
OR
Warehousing is the act of storing goods that will be sold or distributed later. While a small, home-
based business might be warehousing products in a spare room, basement, or garage, larger
businesses typically own or rent space in a building that is specifically designed for storage.

Scope / Objectives of Warehousing

The place where raw material and/or finished goods are stored is referred to as warehouse or store.
Generally, warehouse is structure or building design keeping in mind raw material and finished
goods it is going to store. Therefore, warehouse management should be able to:
Receive the purchase goods and entered upon the stock register.
Inventory Accounting of raw material, work-in-progress or finished goods.
Preservation of the inventory
Ability to access goods whenever called upon.
Appropriate record keeping through coding as to preserve goods and reduce obsolescence.
Proper stocking of goods as ensure smooth handling.
A smooth flow of production
Appropriate layout management to reduce material handling and equipment handling
Reduce to wastage as well as spoilage

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Eliminate the possibility of theft and damage

Ensure preservation of environment and reduce pollution.
Encourage cost reduction and driving efficiency

Primary Functions of Warehouse:

1. Storage
The primary function of warehousing is to provide storage facilities for surplus commodities that
are not needed now. They can be provided as and when demanded by the customers.
2. Price Stabilization
The second function of the warehouse is price stabilization. Warehouses play an essential role in
the method of price stabilization. Warehouse decreases drastic fluctuations in costs by storing
goods when their supply outpaces demand.
3. Risk bearing
When goods are preserved in a warehouse they are exposed to various uncertainties in the form of
fire, deterioration, and stealing, etc. Warehouses are created in such a method that they decrease
these risks. A warehouse owner has to take sensible care of the goods and safeguard them from
several risks. For any loss or provided by goods, the warehouse keeper shall be responsible to the
owner of the goods.
4. Financing
The fourth function of the warehouse is financing. Loans can be raised from the financial
institutions or from the warehouse keeper against the goods stored by the owner. Goods work as a
protection for the warehouse keeper or for protection. In this way, warehousing serves as a cause
of finance for the businessmen for meeting business operations.
5. Grading and packing
Nowadays warehouses give the facilities of packing, processing, and grading of goods can be
packed in suitable dimensions as per the guidance of the owner.
6. Transportation
Nowadays warehouses give transport services to most clients. It stores goods from the point of
production and also sends goods to the point of delivery at the call of the owner.

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7. Time and place utility

The seventh function of the warehouse is that its creation time and place utility warehouse. produce
time utility by storing goods till they are demanded. It also produced place utility by producing the
goods at the place where they are needed.
8. Processing
Several commodities are not used in the form they are produced. processing is needed to create
them consumable. e.g. fruit is ripened, paddy is polished, etc.

Efficient Warehouse Management

1. Maximise and optimise all available space. Rather than expand the footprint of your
warehouse, consider better use of vertical space. Adding taller storage units and the right
equipment to pick and store material can help you keep more in the same square footage, rather
than adding expansion costs. In addition, think about the type and variety of shelving used. Storing
small items on pallet racks wastes space, and makes it easy to misplace items. Rather than using
the same racks throughout your warehouse, you may need various types of shelving for different
materials. Also, try using standardised bins to help keep shelves neat and orderly.
2. Lean Inventory. Adopting lean inventory for your warehouse is just as important as it is in
manufacturing. The basic premise of lean is only what you need, and nothing more. Possibly
reduce or eliminate safety stocks, and try to get suppliers to deliver smaller quantities more
frequently.
3. Adopt enabling technology. A warehouse management system (WMS) or an ERP system with
a strong WMS module can improve efficiency by suggesting the best routes and methods for
picking or put-away.

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4. Organise workstations. Organising workstations improves productivity because workers do

not have to search for tools or equipment. Use the “5S” method from lean manufacturing to ensure
your workstations are as organised as possible. It consists of: Sort; Set in order; Shine; Standardize;
and sustain — all techniques designed to keep clutter at bay, reduce errors, and improve safety and
organisation.
5. Optimise labour efficiency. If your WMS doesn’t have the ability to generate efficient picking
plans, create them manually. Analyse your material usage patterns, and store high-volume items
together near the front of the warehouse to eliminate travel time. Also, store items that are
frequently sold together near one another. Basically, you will streamline operations if you try to
keep the items you pick most often in the most accessible locations to eliminate picking delays.
6. Use Bin Locations and Labelling. To make it easier to find what is needed, the use of bin
locations for certain items will be crucial. Barcode labelling is essential, too. These techniques will
help to ensure that you know exactly where all of the items are supposed to be, making it faster
and easier for your employees to pick the times and fulfil customer orders.
7. Ensure Safety. The safety of your employees should always be of the utmost importance. They
need to understand all of the safety protocols that you have in place, and they need to follow the
rules. They also need to know how to safely utilize all of the equipment that they will be using for
picking items, such as forklifts, dollies, ladders, etc.
8. Train the Staff Properly. In addition to training the staff on safety protocols and how to use
equipment safely, they also need to be trained on how to pick properly. They need to know how
to use their scanners, how to complete orders, and how to work as efficiently as possible. Human
error is one of the most common problems in warehouse inventory management, and the only way
to reduce these errors is with proper training.
9. Reduce Inventory that Doesn’t Sell. You might find that you have some shelves of inventory
that never seem to diminish. It is not because you are restocking a popular item. Instead, it is
because the item on those shelves never sells. These slow-selling items are taking up valuable real
estate in your warehouse. You must understand which items are not selling, so you can then remove
them from your stock. Your company might want to run a sale on them to reduce inventory or find
another means of disposing of them.

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Department of Management Studies
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Types of Warehouses:

Warehouses play a crucial role in the storage and distribution of goods, and they come in various
types to meet different business needs. Here are several types of warehouses:
1. Public Warehouse:
 Definition: Public warehouses are owned and operated by third-party companies
that offer storage and handling services to multiple businesses.
 Features:
 These warehouses are shared among multiple clients.
 Businesses can rent space based on their needs.
 Public warehouses are cost-effective for businesses with variable storage
requirements.
2. Private Warehouse:
 Definition: Private warehouses are owned and operated by a single company to
exclusively meet its own storage and distribution needs.
 Features:
 These warehouses are dedicated to a specific company.
 They provide more control over operations and security.
 Companies with consistent and large storage requirements often opt for
private warehouses.
Asst. Prof. Chandana TC
Department of Management Studies
Sai Vidya Institute of Technology Page 18
 Logistics and Supply Chain Management 22MBA31

3. Contract Warehouse:
 Definition: Contract warehouses are operated by third-party providers under
contractual agreements with specific businesses.
 Features:
 These warehouses offer customized services based on contractual
agreements.
 The client typically pays for the space and services they use.
 Contract warehouses are suitable for businesses with varying storage needs
but who also want specific services tailored to their requirements.
4. Automated Warehouse:
 Definition: Automated warehouses use advanced technologies such as robotics and
conveyor systems to automate various aspects of the storage and retrieval process.
 Features:
 Automation increases efficiency and reduces labor costs.
 Common automated features include robotic picking systems, automated
storage and retrieval systems (AS/RS), and conveyor belts.
 Automated warehouses are suitable for high-volume and repetitive tasks.
5. Climate-Controlled Warehouse:
 Definition: Climate-controlled warehouses maintain specific temperature and
humidity levels to protect sensitive goods from environmental conditions.
 Features:
 Suitable for products like pharmaceuticals, perishable goods, electronics,
and certain chemicals.
 Climate control helps prevent damage from temperature fluctuations and
humidity.
 These warehouses are essential for industries where product integrity is
critical.
6. Distribution Center:
 Definition: Distribution centers are specialized warehouses designed to efficiently
manage the distribution of goods to retailers, wholesalers, or directly to consumers.

Asst. Prof. Chandana TC

Department of Management Studies
Sai Vidya Institute of Technology Page 19
 Logistics and Supply Chain Management 22MBA31

 Features:
 Emphasis on quick and accurate order fulfillment.
 Often strategically located near major transportation hubs for efficient
distribution.
 Utilizes advanced technology for order processing and shipment
coordination.
Each type of warehouse serves specific business needs and preferences, allowing companies to
choose the one that aligns with their storage and distribution requirements.

Warehouse Layout Design, criteria

Different Warehouse Layouts:
There are three different warehouse layouts that have become common over the years. Most e-
commerce businesses utilize one of these three layouts because they’re designed for optimal
efficiency. Let’s look at the three types:
• U-shaped
A U-shaped warehouse layout is the most common. This
feature receiving docks on one side of the building, with
the unloading area, dynamic and static shelving, and
packing area forming a U through the building. The U is
completed as it reaches the shipping staging area and
distribution docks. All goods flow in the direction of the
U, with the only exception being defective or returned
products.

• I-shaped
The I-shaped layout works well for large warehouses or
companies that handle a large number of orders. This
structure is similar to U-shaped warehouses, but with
receiving and shipping on opposite sides of the building.
I-shaped warehouses offer visual simplicity for the
product flow.

Asst. Prof. Chandana TC

Department of Management Studies
Sai Vidya Institute of Technology Page 20
 Logistics and Supply Chain Management 22MBA31

• L-shaped
An L-shaped warehouse layout is designed to increase visibility
and cross-departmental communication. Shipping docks are placed
on one side of the L with receiving docks on the other. Inventory,
staging areas, and any offices are then placed in the corner
opposing the L.

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Asst. Prof. Chandana TC

Department of Management Studies
Sai Vidya Institute of Technology Page 21