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warehouse and its importance

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  1. 1. Warehouse Management<br />
  2. 2. Contents:-<br />Reasons for warehousing<br />Benefits<br />Warehouse operating principles<br />Types of Warehouse<br />Warehousing strategies<br />Warehouse location strategies<br />Site selection<br />Transport<br />
  3. 3. Warehousing:- <br />“Storage or warehousing provides the place utility as part of logistics for any business and along with Transportation is a critical component of customer service standards”.<br />
  4. 4. Customer Analysis<br />Purchasing/Supplier Partnering<br />Order Fulfillment<br />Integrated Supply Chain Management<br />Inventory Management & Control<br />Warehouse & Transportation<br />Manufacturing/ Re-manufacturing / Assembly<br />Demand & Lead Time Management<br />Materials Management<br />
  5. 5. Reasons for warehousing:-<br />To support the company’s customer policy.<br />To maintain a source of supply without interruptions.<br />To achieve transportation economies.<br />To support changing market conditions and sudden changes in demand.<br />To support any JIT programs.<br />To provide customers with the right mix of products at all times and all locations.<br />To ensure least logistics cost for a desired level of customer service.<br />
  6. 6. Benefits of warehousing:-<br />Consolidation.<br />
  7. 7. Consolidation Warehouses:-<br /> Customers<br />Plant A<br />Consolidation Warehouses<br />A<br />C<br />B<br />Plant B<br />Plant C<br />
  8. 8. Benefits of warehousing:-<br />Consolidation.<br />Break bulk warehouse.<br />
  9. 9. Break bulk Warehouses:-<br /> Customers<br />A<br />Break bulk Warehouses<br />B<br />Plant A<br />C<br />
  10. 10. Benefits of warehousing:-<br />Consolidation.<br />Break bulk warehouse.<br />Processing / Postponement.<br />Stockpiling.<br />Service benefits.<br />
  11. 11. Warehouse Operating Principles:-<br />Three Principles are:<br />Design criteria:<br />a) Number of stories in the facility,<br />b) Height utilization,<br />c) Product flow<br />
  12. 12. Warehouse Operating Principles:-<br />2) Handling technology<br />Movement continuity,<br />Movement scale economies.<br />3) Storage plan<br />
  13. 13. Types of warehouses:-<br />It includes:<br />1) Private warehouses,<br />2) Public warehouses, <br />3) Contract warehouses<br />
  14. 14. Warehousing Strategy…<br />An integrated warehouse strategy focuses on two questions. <br />1) The 1st concerns how many warehouses should be employed. <br />2) The 2nd question concerns which warehouse types should be used to meet market requirements.<br />
  15. 15. Warehousing Strategy:-<br />Many firms utilize a combination of private, public, and contract facilities. <br />A private or contract facility may be used to cover basic year round requirements, while public facilities are used to handle peak seasons. <br />In other situations, central warehouses may be private, while market area or field warehouses are public facilities. <br />
  16. 16. Warehousing Strategy…<br />Full warehouse utilization throughout a year is a remote possibility. <br />As a planning rule, a warehouse designed for full-capacity utilization will in fact be fully utilized between 75 to 85 % of the time. <br />Thus from 15 to 25 % of the time, the space needed to meet peak requirements is not utilized. <br />In such situations, it may be more efficient to build private facilities to cover the 75% requirement and use public facilities to accommodate peak demand. <br />
  17. 17. Warehousing Strategy…<br />It may be more efficient to build private facilities to cover the 75 % requirement and use public facilities to accommodatepeak demand.<br />
  18. 18. Warehousing Strategy…<br />Other qualitative factors that should be considered include: <br />1) presence synergies: Inventory located nearby in a building that is clearly affiliated with the enterprise.<br />2) industry synergies: Refer to the operating benefits of collocating with other firms serving the same industry. <br />3) operating flexibility: Refers to the ability to adjust internal policies and procedures to meet product and customer needs.<br />
  19. 19. Contd… <br />4) location flexibility: Refers to the ability to quickly adjust warehouse location and number in accordance with seasonal or permanent demand changes.<br />5) scale economies: Refer to the ability to reduce material-handling and storage through application of advanced technologies.<br />
  20. 20. Qualitative Decision Factors:-<br /> Private Contract Public<br />Presence synergies<br />Industry synergies<br />Operating flexibility<br />Location flexibility<br />Scale economies<br />
  21. 21. The Warehouse location strategies:-<br />1) Market positioned:<br /> a) Order Cycle time<br />b) Transportation cost<br />c) Sensitivity of the product<br />d) Order sizes<br />2) Product positioned:<br /> a) Perishability of the raw materials<br />b) Number of products in the product mix<br />c) Assortments ordered by the customers from the product mix<br />d) Transportation consolidation rates<br />3) Intermediately positioned:<br />
  22. 22. Site Selection:-<br />Location of the major markets.<br />Nature of the products being distributed.<br />Quality & Variety of carriers serving the proposed site.<br />Quality & Quantity of labour available.<br />Cost of industrial land.<br />
  23. 23. Contd…<br />Potential for expansion.<br />Local tax structures.<br />Cost of construction. <br />Cost & availability of utilities .<br />Any local govt. tax concessions or incentives.<br />
  24. 24. Product-Mix Coiderations:-<br />Each product should be analyzed in terms of annual sales, stability of demand, weight, and packaging. <br />It is also desirable to determine the total size and weight of the average order processed through the warehouse. <br />Expansion:-<br />Well-managed organizations often establish five- to ten-year expansion plans. <br />Such expansion considerations may require purchase or option of a site three to five times the size of the initial structure.<br />
  25. 25. Warehouse Layout:-<br />Layout of a warehouse depends on the proposed material handling system and requires development of a floor plan to facilitate product flow.<br />If pallets are to be utilized, the first step is to determine the pallet size. <br />Pilferage Protection:-<br />Protection against theft of merchandise has become a major factor in warehouse operation<br />As standard procedure, only authorized personnel should be permitted into the facility and surrounding grounds.<br />
  26. 26. Product Deterioration:-<br />The most obvious form of product deterioration is damage from careless transfer or storage. <br />Another major form of deterioration is non-compatibility of products stored in the same facility.<br />Product deterioration from careless handling within the warehouse is a form of loss that cannot be insured against and constitutes a 100 percent cost with no compensating revenue.<br />
  27. 27. TRANSPORT<br />
  28. 28. Transport Fundamentals:-<br />Transport involves <br />Equipment <br />People <br />Decisions <br />When deciding the transport mode for a given product there are several things to consider:<br />Mode price<br />Transit time and variability (reliability)<br />Potential for loss or damage.<br />
  29. 29. Single-mode Service Choices and Issues:-<br /><ul><li>Air
  30. 30. Rapidly growing segment of transportation industry
  31. 31. Lightweight, small items
  32. 32. Quick, reliable, expensive
  33. 33. Rail
  34. 34. Low cost, high-volume
  35. 35. Improving flexibility
  36. 36. intermodal service</li></li></ul><li>Contd…<br />Road :<br /><ul><li>Company has flexibility of deciding the drop points .
  37. 37. The operation can be 24 x 7
  38. 38. The risk of Industrial action is minimized.
  39. 39. Insurance, Claims on truckers are quite streamlined.
  40. 40. Ropeways:-
  41. 41. Only for solid.
  42. 42. Can work in long and deep valleys in between.
  43. 43. Suitable for ropeways buckets.</li></li></ul><li>Contd…<br /><ul><li>Water
  44. 44. Low-cost, high-volume, slow
  45. 45. Bulky, heavy and/or large items
  46. 46. Combined with trucking & rail for complete systems
  47. 47. International trade
  48. 48. Pipeline
  49. 49. Primarily for oil & refined oil products
  50. 50. Slurry lines carry coal or kaolin
  51. 51. High capital investment
  52. 52. Low operating costs
  53. 53. Low product losses</li></li></ul><li>Transport Cost Characteristics:-<br />Fixed costs:<br />Transport equipment<br />Carrier administration<br />Roadway acquisition and maintenance<br />Variable costs:<br />Fuel<br />Labor<br />Equipment maintenance<br />Handling, pickup & delivery, taxes<br />
  54. 54. Advantage of Transportation:-<br />Greater economies in the scale of production.<br />Increases competition.<br />Better customer services.<br />
  55. 55. Selection of Transportation mode:-<br />Transport rate related variables.<br />Ability to track the consignment.<br />Customer service capabilities in terms of door-to-door transit time and reliability.<br />Consistency of pick up and delivery.<br />Right handling equipment.<br />Simplicity of the documentation.<br />Handling of complaints and the processing of claims.<br />
  56. 56. References:-<br />Sales Management – Still & Cundiff and Giovonni<br />Sales and Distribution Management – S.I.Gupta<br />www.scribd.com<br />
  57. 57.
  58. 58. Thank You !<br />