Functions of warehousing and decisions

1. Supply Chain Management
Presentation on Warehousing Decisions
Diamond Professional's

2. Group Members:-
Sohaib Afzal
Muhammad Daniyal
Hassan Yaqoob
SCM

3. ACKNOWLEDGEMENT
I would like to thank and express my gratitude
firstly to ALLAH whose helping hand kept me going till
end of this final project, and then towards the people
who contribute in so many ways towards the creation
and completion of this project.
Although we had a short time to prepare it ,but the
experience was quite interesting.
.

4. .
• We tried our level best in preparing this
particular project my instructor and guide
throughout “Sir Mudassar Aziz”, our
parents who support us in a many ways,
my group members - who helped me in
the completion of the project.
.

5. Warehousing
Decisions

6. Table of Contents
1. Acknowledgement
2. What is Warehousing
3. Roles of Warehouse
4. Activities of Warehouse
5. Basic Warehouse Decisions
6. Private vs Public Warehouse
7. Characteristics of Public Warehouse
8. What is Contract Warehousing
9. Q & A

7.  Warehousing is the act of storing goods that be sold
or distributed later.
 A warehouse is a commercial building for storage of
goods.
 Warehouses are used by manufacturers, importers,
exporters, wholesalers, transport businesses, customs,
etc. They are usually large plain buildings in
industrial parks on the outskirts of cities, towns or
villages.
Warehousing

8. 1.Transport Consolidation :
Transport consolidation is a service offered by some shipping companies
to lower the total transportation cost and to increase transport security. It
is also known as consolidation service, assembly service, and cargo
consolidation.
In consolidation, the warehouse receives materials, from a number of
sources, that are combined in exact quantities into a large single
shipment to a specific destination
Functions of Warehousing

9. 2. Cost Advantage
There are several cost advantages to consolidation, both for the
customer and the company. First, consolidating small shipments
lowers overall fuel costs for the freight forwarder. Second, forwarding
small shipments together lowers total shipping costs for the retailer.
In the warehouse consolidation is the use of warehousing to gather
goods that are to be shipped to final destination.
Functions of Warehousing

10. 3. Product Mixing
Product mixing for customer order
means mixing products from multiple
supplier/production facilities to
shipment to a single customer.
Example: meeting customer's order.
Functions of Warehousing

11. 4.Supply mixing for manufacturing activities means mixing
required materials or sub assemblies from multiple suppliers to shipment
to a plant. Example: meeting production order.
Functions of Warehousing

12. 5. Cross Docking
• Reduction in labor costs, as
the products no longer requires
picking and put away in the
warehouse.
• Reduction in the time from
production to the customer, which helps
improve customer satisfaction.
• Reduction in the need for
warehouse space, as there is no
requirement to storage the products
and its handling in the warehouse.
Functions of Warehousing

13. 6. Services
The basic services provided by w/h are
stock control, handling, packaging,
temperature & humidity control,
security, & safety also Having goods
available in a warehouse when a
customer places an order,
Beyond that safety stocks are also
necessary to avoid stock-outs and excess
inventory.
Functions of Warehousing

14. 7. Contingency Protection
Warehousing exists as a protection against contingencies such as
transportation delays, vendor stock-outs, or strikes.
With contingency protection in hand, a firm will not suffer heavy
loss in revenue or incur high costs.
Functions of Warehousing

15. 8. Smoothing:[resource
leveling]
An eight warehousing function is to
smooth operations or decouple successive
stages in the manufacturing process.
In conclusion, warehousing is able to
add value to a firm through smoothing
operations leading to lower costs of
production. The utilization of
warehousing depends on management
objectives set, such as low inventories,
efficient plant operation, good customer
service, and good labor relations.
Functions of Warehousing

16. .
Basic Warehousing Decisions

17. . .
Basic Warehousing Decisions
Ownership Decisions
From ownership point of views, there are different types of warehouses
Private Warehouse
•Warehouse is owned and operated by the firm that own the products
•Companies need the private space to store their inventory.
•Operated as a division within a company
Public Warehouse
•Warehouse is owned and operated by a third party
•Public warehouses can be leased to companies with short-term distribution needs.
•Charges in particular for type of services used
•For example, retailers may seek out additional storage space warehouse just to keep a surplus of
inventory for a short
Contract Warehouse
• Warehouse is owned and operated by a third party
•Handles the shipping, receiving and storage of goods on a contract basis
•A long-term contract, often stated in years rather than months

18. Basic Warehousing Decisions
Centralized or Decentralized Warehousing
Centralized warehousing
Centralized warehousing is a system where a retailer or its supplier maintains a
single, central warehouse versus several facilities spread out to cover a territory
and results in
•reduction of operating costs
•increased shipping costs
Decentralized Warehousing
Decentralized Warehousing is a system where retailer or its supplies maintains
several facilities to cover a territory and results in
•increased ability to store products
•increased operating costs

19. Basic Warehousing Decisions
How many
Determining the optimum number will depend upon
–Nature of the product
–the size and geographical spread of the market
– the current and potential sales in the territory
–the extent of seasonality of demand
–the number of distributors/retail outlets to be serviced by each warehouse
–the possible speed of replenishment of stocks
–the cost involved in operating warehouses.

20. Basic Warehousing Decisions
Location
–Deciding on a warehouse location is a significant decision that impacts every aspect of a
business
–The location of your warehouse directly contributes to the efficiency of your company as
well as the overall customer experience
Criteria for warehouse loacation
–Workforce Availability, Labor Skills
–Roads, Highways & Traffic Flow
–Markets & Local Environment Factors
–Rent Rates & Taxes
–Desired Consumer Base
–Longevity

21. Basic Warehousing Decisions
Size
It is essential to make sure the new facility to the appropriate size: Building too large can be a
waste of capital and too small can limit its capacity. Size will depend on
–How Much Inventory to store?
–How much will it cost ?
–How much do you plan to grow?
–How many warehouses?
–Market Factors , Seasonal Demand

22. Basic Warehousing Decisions
Layout
In terms of warehouse layout, the goal is to achieve optimal efficiency and maximising use of
the available space so that warehouse operation functions as effectively and productively as
possible.
Here are some factors listed for the design and layout of a warehouse:
1.Product: What kind of goods will it hold?
2.Space: What physical characteristics should the warehouse have?
3.Equipment: What means are available? racks, lifts or transport equipment
4.Circulation of goods: How do goods circulate? such as dispatch, receipt and order
preparation processes

23. The Ownership Decision
Following are the factors to consider in ownership decision:
•Throughput volume
•Stability of demand
•Density of market area to be served
•Security and control needs
•Customer service needs
•Multiple use needs of the firm

24. The Ownership Decision
1.Throughput volume:
It is actually an amount of product that a company can produce and
deliver to a client within a specific period of time.
Business with high throughput levels can take market share away
from lower throughput firms and can produce that specific product
more efficiently than their competitors can.

25. The Ownership Decision
2. Demand Variability
It is a variability of inter
arrival times of customers or
orders.
Demand variability
influence the so called pre-
order fulfillment [POF]
POF means an order
delivered in the right
quantity, in the right quality
with some technical
specifications and perfectly
on time.

26. The Ownership Decision
3. Market Density
It is also a part of market dimensions.
 Market Geography
 Market Size
 Market Density
 Market Behavior

27. The Ownership Decision
4. Special Physical Control
physical control
movement
responsibilities

28. The Ownership Decision
5. Stock Control:
a)Stock Leveling
b)Stock Reports

29. The Ownership Decision
6. Customer Service:
Efficiency
Effectiveness

30. The Ownership Decision
7. Security:

31. The Ownership Decision
8.Multiple use needs of the firm:

32. Public Warehousing
Following are the characteristics of Public Warehousing:
Capital investment
Flexibility
Services
Regulations
Receipt

33. Public Warehousing
Capital Investment:
A major advantage is
there is no capital
investment like leasing
of building, material-
handling equipment,
and startup cost of
operation and training
personnel needed.

34. Public Warehousing
Flexibility
[In space / labor / special or
unique setup/ & control]
In Private Warehouse, there is more
degree of control, greater flexibility of
designing and operating the warehouse
that suits the needs of its customers and
characteristics of the products.
This mean that companies who have
specialized handling for its products will
not find public warehousing viable.

35. Public Warehousing
Services:
Bonded Warehousing:
It’s a secure warehouse authorized by Government or
Customs department in which goods are stored until customs
duty is paid.
Field Warehouse:
A warehouse owned by a company other than one using it.
The company using the warehouse pays rent to the owner. It
should not to be confused with field warehousing, which is a
financial term.

36. Public Warehousing
Regulations
Liability:
It is a form of document that describes the obligation of a storage
facility toward its customer.
Warehouse owners and operators can be held responsible if the
goods being stored in their warehouse are destroyed, damaged
or stolen.
Receipt:
A document provides proof of ownership of commodity that is
stored in a warehouse. It can be a negotiable or non-negotiable
instrument. It also shows that a specific quantity and quality of a
specified good is stored in a warehouse.

37. Public Warehousing
Rates:
•Public warehousing rates based upon:
• Value
• Degree of Fragility
• Hazardous Materials
• Volume
• Weight density

38. Contract Warehousing
Contract warehousing is a customized version of public warehousing in which an
external company provides a combination of logistics services that the firm itself
has traditionally provided.
The contract warehousing company specializes in providing efficient, economical,
and accurate distribution services.
These warehouses are designed to adhere to higher standards and specialized
handling needs for products such as pharmaceuticals, electronics, and high value
manufacturing goods.
Contract warehouses are owned by a third party entity. These warehouses provide
specialized services in addition to allowing the lessee or the client to store goods.

39. .