This presentation shows about the kinds of warehouse, its merits and demerits and the distribution network

1. WAREHOUSING &
DISTRIBUTION
CONCEPT, TYPES, FUNCTIONS, FACTORS, COSTS

2. CONCEPT OF WAREHOUSING
 Godowns for keeping and storing goods to preserve goods in a
systematic manner to maintain original quality, quantity and usefulness.
 Raw materials, parts, components, in-processes, finished goods,
maintenance, repairing and operating supplies or any other items used
or sold of a firm.
 Demand of the product cannot be ascertained exactly
 No company can bear stock out situation as there are large number of
alternative products

3. TYPES OF WAREHOUSE

4. PUBLIC VS. PRIVATE WAREHOUSES
Public Warehouses
 Operating costs higher due to inclusion of
profit factor, selling and advertising
 No initial investment
 Can have good control due to incentive to
perform short-term contract
 Risk is minimal
 Can derive tax advantages
 Economies of scale is possible due to
serving many customes
 Consolidate to a warehouse and from the
warehouse to the customer.
 Storage and handling costs can be
ascertained for decision making
Private Warehouses
 10 to 25% lower if in sufficient
volumeLarge facility, startup, equipment,
trained personnel.
 Direct reaponsibility
 Risk of obsolescence due to change in
technology and demand.
 Depreciation alloeance
 Dependent on company’s volume
 No consolidation
 Only estimation

5. FUNCTIONS OF WAREHOUSING
 ECONOMIC FUNCTIONS
 Consolidation
 Break Bulk
 Stockpiling
 Value-Added services
 OPERATIONAL FUNCTIONS
 Receiving of goods
 Up-to-date recording of stock position
 Storing of goods at an appropriate place.
 Protecting and preserving
 Proper handling – loading and unloading
 Order receiving, processing and filing.
 Marshalling of goods – assortment of various
goods to a customer.
 Dispatching of goods
 Preparation of document
 Marketing intelligence – intermediary
between company and customer
 Other legal functions

6. OBJECTIVES
• Availability of goods
• Degree of customer service
• Minimum total distribution costs
ENVIRONMENT
• Demand pattern
• Buying behaviour of customers
• Reaction of customers during stock-out situation
• Warehousing strategies of competitiors
FIRM’S
RESOURCES
• Financial and other resource condition
• Brand equity
• Warehousing facilities required
DECISION
• Centralized or decentralized warehouses
• Locations of the warehousing
• The cost of warehousing

7. CENTRALIZED WAREHOUSE
STRENGTHS
 Need not carry large inventory
 No stock-out situation
 Demand variations can be met at short
notice
 Centralized control of inventory
 Bulk transportation is cheaper
 Less warehousing costs
WEAKNESS
 Transport cost is maximum unless in
bulk quantity
 Distant market demand cannot be met
in short notice
 Loss of customer service advantage
 Poor market coverage and control

8. DECENTRALIZED WAREHOUSES
STRENGTHS
 Market coverage will be maximum
 Increased sales
 Maximization of customer services
 Creates loyalty and goodwill
 Transportation cost will be moderate
 Better control over market
intermediaries.
WEAKNESS
 Huge inventory investment
 Huge warehousing development costs
 Stock-out situation
 Shortage of goods at one warehouse
replenished from another warehouse
requires additional transport costs

9. FACTORS FOR SELECTION OF NUMBER
AND LOCATION OF WAREHOUSES
 NUMBER OF GEOGRAPHICAL LOCATION
 NUMBER OF LOCATIONS OF PRODUCTION CENTRES
 TRANSPORTATION INFRASTRUCTURE FACITLITIES
 NATURE AND QUALITY OF GOODS TO BE STORES
 BRAND LOAYLTY AMONG CUSTOMERS
 FINANCIAL CONSTRIANTS
 POSSIBILITY OF CHANGE IN THE USE OF WAREHOUSE ( SCOPE FOR LEASE OR SALE)
 MANAGEMENT POLICY OF COMPETETIVE ADVANTAGE

10. ELEMENTS OF WAREHOUSING COSTS
• Handling and transfer costs
• Procurement of storage space
• Administrative cost
• Direct and indirect physical facilities
INFRASTRUCTURAL
COSTS
• Cost of working capital
• Goods stored in warehouse as inventory
WORKING CAPITAL
COSTS
MISCELLANEOUS
COSTS
• Tax to be paid
• Insurance for covering risks
• Risk of product obsolescence

11. WAREHOUSE DESIGN
 PURPOSE OF FACILITY :
 Size of the building
 Number of storage levels
 Ceiling height, length and width ratio
 Flexibility of dimensions for material handling
 Floor Load capabilities

12. WAREHOUSE DESIGN
 LAYOUT OF THE FACILITY :
 Required material handling systems & Physical facilities
 Windows
 Material receiving and shipping doors
 Fire doors
 Supporting pillars
 Lighting facilties
 Elevators, cranes, fort lifts, trucks
 Required floor plan
 Receiving, storage, order, selection, packaging, shipping areas within the
warehouse.

16. WAREHOUSE DESIGN
 SPACE REQUIREMENT AND AISLE LAYOUT
 Pallet Placement
 Aisle width
 space needed for other warehousing facilities

17. OPERATIONAL MECHANISM OF
WAREHOUSE
Receiving &
Stocking System
Hiring & Training
Personnel
Developing a
working
procedure system
Developing
Security system
Biling and
Inventory
Mangement
System
Local Delivery
system
Safety an
dMainteneance
Sytem

18. RECEIVING & STOCKING SYSTEM
 Total product-mix to be handled
 Anticipation of the demand pattern and safety stock policy
 Scheduling of arrival of in-bound products
 Time required for unloading products
 Placement in the storage area.
 Slot assignment for different products
 Fixed slot : rigid and permanent assignement of storage area for the
positioning of each single product.
 Variable slot : slot for product positioning in the storage area is always
variable and changes at the arrival of each shipment.

19. HIRING AND TRAINING PERSONNEL
 Identification and definition of the job requirement
 Describing the role of total system and their hiring
 Acquanting hired personnel with the job profile
 Locating the training need
 Regrouping of personnel for various operations
 Providing hand-on-training to different groups

20. DEVELOPING WORKING PROCEDURE
SYSTEM
 Maintaining proper inventory recroding system
 Order processing system
 Invoicing and documentation
 Foww-up of the loading procedures such as assortment, item checking,
adequate packaging
 Full pallet load stability
 System for sharing information regarding the status of the order and
shipment schedules.

21. DEVELOPING SECURITY SYSTEM
 Protecting goods from theft
 Security provisions for proper maintenance of the warehouse
 Speccial provisions for unwanted situation
 Development of a standard procedure for checking at the time of entry
and exit of the employees
 Procedure for the entry of guests, customers, etc.
 Facilities for preserving the physical attributes of the goods
 Prevention of careless handling of goods
 Proper utilization of material handling equipments

22. BILING AND INVENTORY MANAGEMENT
SYSTEM
 Preparation of invoices and dispatch challans
 Preparation of shipping documents
 Procedure for proper and up-to-date inventory management system
 Prevention of stock-out situation
 Prevention of under/over stocking

23. LOCAL DELIVERY SYSTEM
 Schedule for the movement of trucks for the delivery of goods to the
customer as per their order specification.
 Routing of trucks in case of multi-customer delivery schedule to fill the
load capacity of the trucks
 Trade-off between total distribution cost and distance covered by
vehicles.

24. SAFETY AND MAINTENANCE SYSTEM
 Development and deployment of a well-balanced safety programme in
order to prevent accidents.
 Proper and continuous examination and maintenance of all material
handling equipments
 Floor cleaning system on a regular basis
 Installation of fire-fighting systems and proper lighting