Storage and Warehousing

Techniques

Warehouse Management, 3rd edition by Gwynne Richards

Published November 2017 (Kogan Page)

Copyright D.G. Richards 2015

Introduction and Background
Section 1

Copyright D.G. Richards 2015

What are the roles of a warehouse in your
view?

Copyright D.G. Richards 2015

Warehouse definition
“Warehouses are typically viewed as a temporary
place to store inventory and as a buffer in supply
chains.
They serve as static units matching product
availability to consumer demand and as such have
a primary aim which is to facilitate the movement
of goods from suppliers to customers, meeting
demand in a timely and cost effective manner”.
Primarily a warehouse should be a trans-shipment
area where all goods received are despatched as
quickly, effectively and efficiently as possible.
Van den Berg (2012)

Copyright D.G. Richards 2015

Whether they’re old….

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 Or ultra-modern

they have the majority of processes in common

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Terminology
• ABC Activity based costing
• ABC Method of prioritising items
• AIDC Automatic Identification and Data Collection
• AS/RS Automated storage and retrieval system
• CMI Co-managed inventory
• CPFR Collaborative Planning, Forecasting and Replenishment
• EDI Electronic Data Interchange
• EPOS Electronic Point of Sale
• ERP Enterprise Resource Planning e.g. SAP, Oracle
• FLT Fork lift truck
• JIT Just in Time
• OTIF On time in Full
• PPT Powered pallet truck
• RFID Radio Frequency Identification
• SAP A well-known ERP system
• SKU Stock keeping unit
• VMI Vendor Managed Inventory
• WMS Warehouse Management System

Copyright D.G. Richards 2015

The Objectives of Warehousing
 The primary objective of warehousing is to maximize
the effective use of the operational resources while
satisfying customer requirements.
 Match product availability to customer demand
 Maximum customer satisfaction at Minimum cost
 Ensure visibility and accuracy of stock
 SIX BASIC PRINCIPLES
 Accuracy, Cost Control, Cleanliness,

Efficiency, Safety & Security

Copyright D.G. Richards 2015

Warehouse trade-offs
Accuracy
• Speed

• Time V Space

Service
• Cost

Accuracy
• Cost

Responsiveness
• Efficiency

Storage costs
• Volume purchases

Copyright D.G. Richards 2015

Key Warehouse Challenges (Adapted from Dematic)
Challenge Operational Requirements
Increase productivity, improve utilisation of space, staff and
Cost reduction
equipment

Improve productivity, increase accuracy, improve handling and invest

Achieve the Perfect Order
in systems

Shorter order lead times Improve processes and increase productivity

Sales via multiple channels and Improved picking strategies such as bulk picking and greater use of
increase in smaller orders technology

Fluctuations in demand Flexible working hours and improved forecasting

Improved use of equipment such as carousels, A Frames and flow

Proliferation of SKU
racks

Staff retention through excellent working conditions, flexible hours,

Labour cost and availability
training and improved productivity

Increasing cost of energy and

Manage energy more efficiently, better use of waste
environmental challenges

Data accuracy and speed of Introduce Warehouse management system and real time data
transfer transfer
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Warehouses in the supply chain
Raw materials
Disposal

Component manufacture D
Re-process
i
r
Product assembly /manufacture e
c
t
R c
Wholesalers/Dealerships Retailers
e e s
t n a
u t l
r r
e
n e
s s s

Consumers

- Warehouse requirement
Copyright D.G. Richards 2015
Role of the warehouse

To facilitate getting the product to the customer:

• On time (OT)
• In Full (IF)
• To the right place
• In the right condition
• With the right paperwork
• At the right cost
• As environmentally friendly as possible

Copyright D.G. Richards 2015

The need for retailer warehouses?
• To better match supply with customer demand
• To consolidate deliveries and reduce shipping costs
• To reduce store deliveries

Warehouse

Vendors Retail stores Vendors Retail stores

Copyright © John J. BARTHOLDI III. Georgia Tech University All Rights Reserved.

Copyright D.G. Richards 2015

Why do we need to hold stock?

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Why do we need to hold stock?
• Buffer in the supply chain or manufacturing process

• Satisfy demand – can be erratic

• Buy low sell high – precious metals, oil, coffee etc.

• Shortage or unreliability in supply

• Cope with peak demand - seasonality

• Maintenance parts

• Quality control cover

• Customer and supplier lead times

• Sub assembly

• Holding stock in numerous locations

• Ability to increase production runs

• Humanitarian storage

• Archive storage

• Smooth the flow of goods

• Packaging material

• Store returns

• Promotions and Product launch

• Cover for production shutdowns

• Lower unit cost if bought in large quantities and if transported in large quantities

• Production breakdown

• Ripening products, cheese, meats, whiskies

• Delay taxation payments

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Seasonality/demand uncertainty Finished Goods storage

12000

10000

8000

C1
No. of pallets

C2
6000 C3
C4
Total FG

4000

2000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Week number
February 2010

July 2009

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 Seasonality/demand uncertainty
Distributor Collections 2009
300,000

250,000

200,000
Kgs

150,000

100,000

50,000

-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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Construction company Sales and stock

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Bathroom Manufacturer Seasonality
300

250
Pieces in Thousands

200

Excess Supply Demand exceeding supply Stock

150
Sales

100

50

0
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Month

Copyright D.G. Richards 2015