Warehouse Management Notes
Warehouse Management Notes
•Definition: Physical distribution refers to the activities associated with the movement of goods from the producer to the consumer. It
encompasses all activities related to the efficient movement of finished goods from the end of the production line to the consumer.
•Importance:
•Timely Delivery: Ensures that goods reach customers as per the promised timeline, enhancing customer satisfaction.
•Cost Reduction: Minimizes transportation, warehousing, and handling costs.
•Market Expansion: Facilitates entry into new markets by ensuring product availability.
•Inventory Management: Reduces the risk of stockouts or overstocking.
•Customer Service: Boosts customer loyalty by ensuring reliable distribution services.
•Evolution:
•1950s-60s: Focus on transportation and warehousing.
•1970s: Introduction of computerized inventory control.
•1980s: Just-In-Time (JIT) and lean logistics concepts.
•1990s-Present: Integration of logistics into Supply Chain Management (SCM), emphasizing end-to-end coordination.
•Integration:
•Logistics involves planning, implementing, and controlling the efficient flow of goods, services, and information.
•SCM integrates all processes from sourcing raw materials to delivering finished goods, ensuring smooth coordination between
all partners in the supply chain.
•Inbound Logistics:
•Definition: Activities related to receiving, storing, and distributing incoming raw materials or components.
•Outbound Logistics:
•Definition: Activities involved in delivering finished products to end customers.
•Key Differences:
•Inbound manages supply, while outbound manages demand.
•Definition: A warehouse is a facility for storing goods until they are needed for distribution.
•Importance:
•Buffer Against Demand Fluctuations: Helps manage supply-demand gaps.
•Cost Efficiency: Consolidates products for bulk shipping, reducing transportation costs.
•Value-Added Services: Includes packaging, labeling, and quality checks.
•Inventory Management: Ensures smooth order fulfillment by holding safety stock.
•Challenges:
•Space Utilization: Efficient use of warehouse space.
•Stock Discrepancies: Mismatches between recorded and actual inventory.
•Handling Perishables: Ensuring temperature control and proper storage.
•Cost Management: Balancing inventory holding costs and service levels.
•Space vs. Speed: Larger space reduces crowding but increases rent.
•Cost vs. Service: Higher service levels (faster shipping, more stock) may raise costs.
•Stock Level vs. Storage Cost: More stock improves availability but requires more storage investment.
•Automation vs. Flexibility: Automation boosts speed but can limit adaptability.
9. Types of Warehouses:
•Public Warehouses: Open for use by multiple businesses, cost-effective for small firms.
•Private Warehouses: Owned by companies for their own use, suitable for large, stable businesses.
•Bonded Warehouses: Store imported goods until customs duties are paid.
•Distribution Centres: Focus on fast-moving goods for rapid distribution to retailers/customers.
•Fulfillment Centres: Specialized for e-commerce, handling online orders efficiently.
•Definition: An electronic document sent by the supplier, informing the recipient about the shipment details in advance.
•Benefits:
•Improved Planning: Helps prepare for incoming shipments.
•Error Reduction: Reduces mismatches between expected and received goods.
•Enhanced Efficiency: Speeds up receiving and put-away processes.
•Blind Receiving: Accepting shipments without checking purchase orders, then verifying later.
•Direct Receiving: Immediately moving goods to production or sales areas.
•Scheduled Receiving: Pre-arranged deliveries to streamline warehouse operations.
•Consequences:
•Inventory Inaccuracy: Delayed GRNs result in unrecorded stock.
•Payment Delays: Suppliers may face payment issues.
•Production Interruptions: Missing stock data can halt operations.
•Supplier Trust: Can damage supplier relationships.
1. Classification of Inventory:
•Just-In-Time (JIT):
•Inventory arrives exactly when needed for production.
•Fill Rates:
•Measures the percentage of customer demand met without stockouts.
•Definition: EOQ calculates the ideal order quantity that minimizes total inventory costs.
•Formula:
Where:
•Instantaneous replenishment.
•Example:
•Annual demand (D): 10,000 units
•Goals: Optimize space, ensure efficient material flow, and reduce handling time.
•Types of Layouts:
•U-shaped Layout: Maximizes efficiency with shipping and receiving areas at both ends.
•I-shaped Layout: Suitable for high throughput with clear entry and exit points.
•L-shaped Layout: Ideal for limited space or corner locations.
•Key Considerations:
•Space utilization.
•Status of Ownership:
•Private Warehouse: Owned by a company for internal use.
•Public Warehouse: Rented space open to multiple businesses.
•Contract Warehouse: Operated by a third party for a fixed period under a contract.
•Outsourcing Decision:
•Deciding whether to manage warehousing in-house or outsource to third-party logistics (3PL) providers.
•Location of Warehouse:
•Close to suppliers for inbound efficiency or near customers for faster outbound logistics.
•Number of Warehouses:
•More warehouses reduce delivery time but increase operational costs.
•Fewer warehouses lower costs but may extend delivery lead times.
•Definition: A distribution model where a central hub is used for sorting, consolidation, and dispatching goods to various spokes (smaller
distribution points or delivery locations).
•Importance:
•Reduces transportation costs.
•Definition: A logistics practice where products are unloaded from inbound trucks and directly loaded onto outbound trucks with minimal
or no storage time.
3. Yard Management
•Definition: Managing truck movements, trailer locations, and dock assignments within a warehouse yard.
•Key Functions:
•Scheduling inbound and outbound trucks.
•Importance:
•Improves dock utilization.
•Transportation Discrepancies:
•Shortage: Fewer items received than listed on the invoice.
•Damage: Goods damaged during transit.
•Mis-shipments: Incorrect items delivered.
•Inbound Discrepancy Handling:
•Immediate inspection upon receipt.
•Definition: The process of claiming compensation for damaged or lost goods during transit.
•Types of Logistics Insurance:
•Transit Insurance: Covers goods in transit.
•Warehouse Insurance: Protects goods stored in warehouses.
•Steps in Claims Settlement:
•Report loss to insurer.
•Assessment by insurer.
•Claim settlement.
•Insurance Management:
•Ensures all goods are insured during transportation and storage.
•POD Handling:
•Ensuring timely collection and recording of PODs.
•Bar Codes:
•Optical representation of data (lines, spaces).
•Comparison:
•Barcodes need line-of-sight; RFID does not.
•Importance:
•Enhances accuracy in inventory tracking.
•Definition: Software that controls and tracks warehouse operations, including inventory management and order fulfillment.
•Functions:
•Receiving, putaway, picking, packing, and shipping.
•Benefits:
•Optimizes space usage.
•Improves accuracy.
•Optimizes space.
11. Palletisation
•Definition: Controlling and overseeing inventory levels to meet demand without overstocking.
•Key Strategies:
•Reorder Point (ROP): Stock level that triggers replenishment.
•Safety Stock: Extra stock to avoid stockouts.
•FIFO & LIFO: Inventory valuation methods.
•Importance:
•Ensures product availability.
•Importance:
•Maintains inventory accuracy.
•Definition: Shelf life management refers to the systematic tracking and control of the time during which inventory remains usable,
saleable, or consumable.
•Importance:
•Prevents selling expired or spoiled products.
•Ensures compliance with legal and industry standards (especially in food, pharmaceuticals, and cosmetics).
•Techniques:
•FIFO (First In, First Out): Ensures older stock is sold before newer stock.
•FEFO (First Expiry, First Out): Prioritizes items closest to their expiration date for dispatch.
•Batch Tracking: Monitors shelf life by tracking batch numbers linked to production and expiry dates.
2. Importance of Batches
•Definition: Batches are groups of products manufactured under the same conditions, assigned a unique identifier for tracking.
•Importance:
•Enables traceability in case of defects or recalls.
•Batch Number: A code used to identify and track products from production through the supply chain.
3. Batch Management
•Definition: The process of monitoring and managing batches throughout the supply chain, ensuring proper handling and traceability.
•Key Components:
•Assigning batch numbers during production.
•Definition: Inventory accuracy means that the quantity of stock recorded in the system matches the actual physical count.
•Benefits:
•Prevents stockouts or overstocking.
•Causes of Inaccuracy:
•Human error during data entry.
•Theft or pilferage.
5. Cycle Counting
•Definition: A continuous process of counting a subset of inventory regularly instead of performing full stock counts.
•Methods:
•ABC Analysis: High-value items (A) counted more frequently than lower-value items (C).
•Random Sampling: Counting items at random intervals.
•Benefits:
•Identifies discrepancies promptly.
6. Perpetual Counting
•Definition: A method where stock levels are updated in real-time with every transaction (inbound, outbound, or stock adjustments).
•Tools:
•WMS (Warehouse Management System): Automatically records transactions.
•RFID (Radio Frequency Identification): Scans and updates inventory data wirelessly.
•Advantages:
•Real-time data visibility.
7. Stock Auditing
8. Picking Management
•Definition: The process of selecting items from storage to fulfill customer orders.
•Importance:
•Impacts order accuracy and customer satisfaction.
•Challenges:
•Managing high volumes during peak seasons.
9. Order Processing
•Importance:
1.Ensures legal record-keeping.
11. Documentation
•Tracking deliveries.
•Importance:
•Reduces lead times.
•Optimizes costs.
•Traffic conditions.
•Delivery priority.
•Tools:
•GPS.
•Benefits:
•Reduces fuel costs.
•Minimizes delays.
•Definition: Managing the process of receiving, processing, and restocking returned goods.
•Steps:
1.Initiation: Customer requests return.
2.Validation: Verify item condition.
3.Processing: Issue refund or replacement.
•Importance:
1.Improves customer satisfaction.
17. Modern Trade Shipment Handling
•Importance:
•Strengthens retail partnerships.
Storage of Inventory
Efficient inventory storage is crucial for maintaining stock integrity, optimizing space utilization, and ensuring smooth order fulfillment. Several
methods and techniques are employed to achieve these objectives.
Space Utilization
•Palletization: This involves stacking goods on pallets, which are portable platforms that facilitate efficient handling and movement of
goods using forklifts or pallet jacks. Palletization standardizes load sizes, optimizes storage space, and improves safety.
•HD Racking (Heavy-Duty Racking): HD racking systems are designed to store heavy and bulky items. They are typically made of robust
materials like steel and can withstand significant weight loads. HD racking is commonly used in warehouses and distribution centers for
storing large quantities of palletized goods.
•Pallet Racking: This is a versatile storage system that uses vertical frames and horizontal beams to create multiple storage levels. Pallet
racking allows for easy access to individual pallets and maximizes vertical space utilization.
•Types of Racking:
•Selective Racking: The most common type, offering direct access to each pallet.
•Drive-in Racking: High-density storage where forklifts drive into the rack to access pallets.
•Push-Back Racking: Uses inclined rails to store pallets, with gravity assisting in loading and unloading.
•Cantilever Racking: Ideal for storing long, bulky items like lumber or pipes.
•Mezzanine Racking: Creates additional floor space by adding a raised platform.
Inventory discrepancies can arise due to various reasons, leading to inaccurate stock records and potential financial losses.
•Shelf Life Issues: Products with limited shelf life can expire or become obsolete, leading to discrepancies between physical stock and
recorded inventory. Proper stock rotation (FIFO - First-In, First-Out) and regular checks are essential to minimize this issue.
•Batch Number Variation: Different batches of the same product may have variations in quality or specifications. Tracking batch numbers
helps identify and manage any discrepancies related to specific batches.
•Shortages/Excess: Shortages occur when the physical stock is less than the recorded inventory, while excess is the opposite. These
discrepancies can arise due to theft, damage, miscounting, or errors in record-keeping. Regular stocktaking and reconciliation with
inventory records are crucial.
•Damages/Shrinkage: Damage refers to physical deterioration of goods, while shrinkage encompasses losses due to theft, spoilage, or
obsolescence. Proper handling, storage, and security measures can help minimize these discrepancies.
Material handling equipment plays a crucial role in efficient warehouse operations. Proper selection and utilization of this equipment can significantly
impact productivity, safety, and cost-effectiveness.
ERP systems integrate various business processes, including inventory management, order processing, and financials. They provide a centralized
platform for managing warehouse operations and improving efficiency.
EDI enables the electronic exchange of business documents, such as purchase orders and invoices, between trading partners.1 This streamlines
communication, reduces errors, and improves efficiency in supply chain operations.
ICEGATE is a portal that facilitates electronic filing of customs documents for import and export activities. It streamlines customs procedures,
reduces paperwork, and improves efficiency in international trade.
Performance Management
Performance management involves setting goals, monitoring progress, and evaluating results to ensure warehouse operations are efficient and
effective.
• Health and Safety: Implementing safety protocols, providing training, and maintaining a safe work environment.
• Environmental Compliance: Adhering to environmental regulations, minimizing waste, and reducing pollution.
• Green Initiatives: Implementing sustainable practices, such as energy conservation, recycling, and using eco-friendly materials.
Importance of Facility Layout & Critical Considerations for Planning Facility Layout
• Importance: An efficient facility layout optimizes space utilization, minimizes material handling, and improves workflow.
• Critical Considerations:
• Product Flow: Design the layout to facilitate smooth movement of goods.
• Storage Space: Allocate space based on product size, volume, and turnover rate.
• Equipment Accessibility: Ensure easy access to material handling equipment.
• Safety: Design the layout to minimize hazards and ensure worker safety.
• Flexibility: Allow for future expansion or changes in operations.
• Ergonomics: Consider worker comfort and efficiency in the design.
• Accessibility: Ensure easy access for receiving and shipping.
• Lighting and Ventilation: Provide adequate lighting and ventilation for a comfortable work environment.