Warehouses play an important role in logistics by storing goods prior to distribution. The key functions of a warehouse include receiving, storage, order picking, packaging and shipping. Warehouses must address various operational challenges such as inventory inaccuracy, redundant processes, demand fluctuations, and high labor costs. A warehouse decision model can help identify strategic, tactical and operational needs based on objectives, resources and product characteristics. Emerging warehouse strategies like virtual warehousing use software to provide real-time inventory visibility across distributed storage locations.

1. WAREHOUSE

2. CONTENTS
• What is warehouse?
• importance of warehouse.
• Types of warehouse
• Logistical challenges in warehousing
• Functions of warehouse
• Warehousing strategy - virtual warehouse

3. Warehousing and
inventory storage
- not a modern
concept.
• It has been in existence since 2600 B.C.
• Traditionally – Receiving, storage, shipping

4. warehousing
• place where goods and products are
stored prior to it being distributed, sold or
used.
• act of re-position of material

5. IMPORTANCE OF
WAREHOUSE
Keeping
Goods Safe
Supply and
demand
fluctuations in
check
ensure
stable
prices.
Control
Over
Products
Improved
Workflow
Faster
Shipping and
Delivery
Close to
Target
Market

6. Warehouse
Private
Warehouse
Public
Warehouse
contract
Warehouse
Bonded
Warehouse
Co-operative
Warehouse
Raw material
&
Component
Warehouse
Work-in
progress
Warehouse
Finished
goods
Warehouse
Distribution
Warehouse
Fulfilment
Warehouse
Local
Warehouse
Value added
service
Warehouse

7. Logistical Challenges in
Warehouse

8. Inventory Inaccuracy
Inaccurate inventory causes problems such as:
● Maintaining improper stock levels.
● Buildups of obsolete inventory.
● Inaccurate information
● Leading to inefficient processes.
● Lowered productivity.
● Increased expenses.
● Corresponding lost revenue.

9. Example:
Looking for a product That product is
available
Order placed But in warehouse
that product is out
of stock
Assume that you're ordering a product in a online shopping
platform.
Solution:
Automated systems:
● Accurate information.
● Managing inventory in a warehouse.
● Increase Productivity.
● Reduces unnecessary expenses.
● Growth in revenue.

10. Redundant Processes
❖ Redundancy in warehouse processes
can greatly harm how well your
inventory system works. As much as
possible, you want to reduce
inventory clutter that can increase
your cost of operations.

11. Example:
❖ Think about how many trips
a picker takes across a
warehouse to pack each
order.
Solution:
● Barcode technology
● Automated systems
The major things that you can do to eliminate
redundancies.
PICKING
PACKING

12. Poor Warehouse Layout
● Inadequate storage space.
● Inefficient use of available storage
● poor facility layout.
● Poorly configured warehouses.

13. Example:
The following areas must be perfectly defined when designing a
layout:
A. Loading and unloading areas
B. Reception area
C. Storage area
D. Picking area
E. Dispatch area

14. Example:
C. Storage area
Think that layout of storage area is not
design properly and it was always a
messy storage area where all the
goods stored randomly without any
planning like how and where to store.
This will result in
● time waste,
● unnecessary labour cost,
● product will get damaged, etc,.

15. Solution:
● Considers both the floor and the vertical space,
● Maximisies use of equipment and labour,
● Maximisies accessibility to all items,
● Maximisies the security of all items,
● Maximisies safety of staff,
● Employing forklifts,
● Highest-selling inventory is easily accessible,
● Streamlining dock-to-stock processes.

16. Erratic Demands
● Fluctuations in demand are posing
serious challenges for warehouse
managers.
● Major cost problems for warehouses
due to Increased inventory levels on
some levels, while on others PPE
suppliers suddenly found themselves
scrambling to fulfil.
● The problem highlights the challenge of
managing fluctuations in demand due to
external forces beyond the
warehouse’s control.

17. Example:
● Assume the in a warehouse where they brought a product (X) in bulk quantity.
● The product is ready for delivery and suddenly covid hits.
● Because of covid pandemic they can't transport the product (X) to the distributor.
● So the warehouse has to store the product(X) for more days than they expected.
Solution:
● Managing seasonality in demand requires
timely and accurate information
● Information gaps distributor to monitor and
respond to changes in demand effectively.
● Rearranging the products to match changes
in demand

18. High Labor Costs
● High labor costs in an intensive labor
environment will lower productivity
● These costs can constitute about 65% of
the operating budgets of most
warehouses
● Use expensive equipment and employ
large labor forces, presenting a
challenge in warehouse

19. Example:
Receiving Put-away Storage Picking Packing Shipping
These are the working processes in warehouse
Has large workforce than other department
Solution:
The major strategies to solve labour-related problems
● Maximising available labour
● Replacing labour with automated systems
● Developing the right workforce planning

20. Picking Optimisation
● Picking is where majority of problems occurs.
● This problem is a result of poor receiving and
put-away process.
● Disturbs inventory control system.
● Struggling to improve operational efficiency.

21. Example:
Miscounted units
Unloading Stored with
error
Order
placed
Picking
task
Time &
Money waste
Solution:
● Standardize processes.
● Including pick routes.
● Invest in appropriate
automation.
● Dedicated attention to
master data.
Imagine that you are a manager in a warehouse

22. Quality Control
● Workers in charge of quality control
also do the picking, packing and
shipping of inventory items.
● Many errors never get found until they
arrive at the customer.
● This is especially prevalent in a
pandemic environment where
warehouses are trying to ship more
with less staff available.

23. Example: Assume that a warehouse management just bypasses the
quality control in favor of quick fulfillment. What are the issues
they will face.
● Wrong or defective inventory shipped.
● Poor stock rotation.
● Manual errors.
● Automation system program errors.
● Poor inventory management.
Solution:
● Dedicated quality control team.
● Separate level of authority.
● record vendor accuracy.
● Improve stock rotation
● Reduce the manual processing.

24. WAREHOUSE DECISION MODEL
MEANING:
The warehouse decision model helps in
identifying the strategic, tactical and operational needs of a
warehouse system to fit into the overall objectives of a
supply chain

25. WAREHOUSE DECISION MODEL:
PRODUCT
PRODUCT
CHARACTERISTICS
OBJECTIVES
RESOURCES
SOLID, LIQUID, GAS
VALUE DENSITY,LOGISTICAL
REACH,PERISHABILITY,HAZARDOUS
COST REDUCTION , TURNOVER,
CUSTOMER SERVICE,PRODUCTIVITY
FINANCE,SYSTEM,WORKFORCE

26. PRODUCT CHARACTERISTICS:
❏ For any product, the value density (unit price per unit
weight or volume of a product) and logistical reach will
influence decision making on investing in a warehouse
facilities
❏ For example, investment in a storage facility is justified
for products such as computers, jeweler, luxury goods
where the unit price is high, the logistic reach is wide
and distribution centers are limited in numbers.
❏ Due to high margins and shorter payback period the
heavy investments are justified.

27. ❖ Objectives have to be clearly defined.
❖ Volumes will justify private warehouses while
seasonality will justify public or contract storage
places.
❖ For customer satisfaction through reliable
delivery,investment in material handling and
information processing system is justified.
WAREHOUSE OBJECTIVE:

29. ● LAYOUT
● HANDLING
EQUIPMENTS
● STORAGE SYSTEM
● STRATEGIC DECISIONS ARE
SOLELY DEPENDENT ON
THE OBJECTIVES,AVAILABLE
FINANCIAL RESOURCES,ROI
AND PAYBACK PERIOD
● THESE DECISIONS WILL
HAVE A LONG-TERM EFFECT
AND HELP IN DEVELOPING
COMPETITIVE ADVANTAGES
STRATEGIC
DECISIONS:

30. ● STORAGE
ALLOCATION
● ORDER PICKING
● PACKING
● Tactical decisions will have
an effect on the warehouse.
performance parameters
such as.
● Reduction in the order
processing cycle
● Efficiency in material
handling Packaging to
reduce product damages
● Reducing customer
complaints and enhancing
the customer satisfaction
level.
TACTICAL DECISION:

31. OPERATIONAL DECISION:
● WORK ALLOCATION
● JOB SCHEDULING
● PERFORMANCE
MONITORING
Operation decision will
bring efficiency in the
warehouse operations will
help in reducing the
operation cost

32. WAREHOUSE FUNCTIONS

33. FUNCTIONS OF A WAREHOUSE
Receiving: This includes tasks
related to the receipt of all incoming
products at the warehouse, ensuring
that the quality and quantity of the
received products are as ordered,
and then transfer the products to
storage.
Pre-packing (if required): This
happens when products are received
in bulk from the supplier and are
required to be packaged individually
in merchandisable quantities.

34. ● Transporting to the appropriate storing
place: This is also referred to as put away.
This includes material handling, storage
location identification and placement.
● Storage: The primary function of a warehouse
is to provide storage space for inventory.
● Order picking: This task involves physical
picking of the product from the storage place to
meet the demand.

35. Packaging: Each customer order is required
to be handled individually and it is to be
ensured that each order is complete and
accurate according to the needs of customers.
Sorting: This includes the shipment of
products as per their packaging and
destination.
Shipping: Moving and loading assembled
orders physically on some transport carriers to
their destination. Includes preparing shipping
documents.
Claim settlements: Any transit damage
material and material rejection claim
settlements are done in the warehouse to
control shrinkage.
Retrieval System CasePicking
System
Broken Case
PickingSystem
Put-Away Material Handling Sorting
Receiving Cross Docking Shipping

36. OTHER BASIC FUNCTIONS
Safeguarding of Goods: This includes
protecting products from natural factors, such as
heat, wind and rain. It helps reduce spoilage
during storage.
Risk bearing: After handing over the products to
the warehouse, the responsibility of these
products, including any losses on account of
shrinkage, theft or damage, is responsible by the
warehouse operator.
Financing: When products are deposited in a
warehouse, the depositor gets a receipt and/or a
warrant. This warrant or warehouse receipt can
be used by the trader as collateral to take a loan
from a financial institution.
Processing: Certain commodities require some
processing to make them consumable. For
example, wood is seasoned and fruits are
ripened. At times, warehouses perform such
activities at the behest of the owner.

37. Transportation: This facility is provided by
some warehouses to certain depositors. It
collects the product from the point of origin and
delivers it to the desired location at the behest of
the depositor.
Easy handling: Mechanical equipment in
modern warehouses enables easy handling of
products including loading and unloading.
Provide regular flow: This includes
commodities, such as rice and wheat, which are
produced during a particular season, but are
consumed throughout the year.
Cycle counting: A small sample of inventory is
counted inside the warehouse at any particular
place and this sample represents the count of all
items in the store.

38. WAREHOUSING ACTIVITIES
Warehousing has an important role to
play in the logistics system of
organizations.
Product movement can be deemed
as shifting goods while undertaking
various warehousing activities in
which goods are moved from one
place to another. The four main
activities involved in the product
movement are
Warehousing
Activities
Information Transfer
Product Storage
ProductMovement
PRODUCT MOVEMENT

39. THEPRODUCT STORAGE
Activity refers to the accumulation of inventory for a
time period. In warehouses, inventory storage may
happen for different lengths of time and in different
storage locations, depending on the purpose of
storage.
INFORMATION TRANSFER
Managers need to have timely, precise information
and free from errors. It may then be presented to the
higher management for the purpose of making more
informed and better decisions.
Improving their means, speed and accuracy of
information transfer by using modern and
computerized processes, such as pre-packing bar
codes, Electronic Data Interchange (EDI) systems.

41. HIGH SPEED SORTATION SYSTEM
INVENTORY MANAGEMENT: Barcode, RFID, Optical systems.
WAREHOUSE MANAGEMENT SYSTEM: WMS is automation software that streamlines everyday
operation in warehouse.
FULFILLMENT CENTERS: Pick and pack order, focus on delivering the order quick as possible.
VALUE ADDED SERVICES: Processing , Branding etc.

43. Warehouse
strategy

44. Objective of
warehousing
strategy
● to provide value-
added services such
as product
customization
● Products to
consumer asap

45. Physical warehousing
supplier manufacturer wholesaler retailer consumer

46. Problems with physical
warehousing
Lack of inventory visibility in real time
Difficulty in predicting the movement and exact placement of the
product in the chain,
Increased logistics and shipping costs,
Increased operational costs because of manual errors and inefficient
management of multiple distribution centers and warehouses,
Improper demand forecasting leading to stock-outs or overstocking,
and more.

47. SUPPLIER PARK AND JOINT WAREHOUSE

48. DISADVANTAGE
invest large sums of money
it is difficult for those suppliers that
have different buyers
(manufacturers) to collaborate
with each other by spending their
investment costs.

49. What is virtual
warehouse?
● According to the Science Direct,
a virtual warehouse is “a state
of real-time global visibility
for logistics assets such as
inventory and vehicles.”
● Simply put, it is software that
provides a comprehensive view
of assets and materials for
logistics and fulfillment
purposes.

50. VIRTUAL
WAREHOUSE
● Inventory information on
the materials provided by
the suppliers can be
stored together.
● Supplier can access and
update about its inventory

51. VIRTUAL WAREHOUSE

52. INFORMATION
SHARING
Each supplier can
access only the
information about its
inventory
Tight relationship
between the
manufacturer and its
suppliers
No costs of physical
warehouse

53. better operational performance
reduction of finished goods inventory,
parts purchasing quantity
degree of backlogs
total cost

54. VW OF
RETAILERS ● distribution centers/ fulfillment centers are
considered as a network
● When an order arrives, the network is
consulted, irrespective of where the
product is stored, to identify the best
possible way to fulfill the order as quickly
as possible.

55. Example
Customer
FINLAND Portugal
RETAILER

56. BENEFITS
reducing the inbound
transportation costs while
keeping the inventory
costs and delivery time in
check.
Helps in improving service
levels
Helps in avoiding
maintaining unnecessary
safety stock
Helps in effective
forecasting of inventory to
counter erratic and
seasonal demands

57. BENEFITS
FULFILL ORDERS
FASTER
360-DEGREE VIEW
OF THE INVENTORY

58. CENTRALISED INVENTORY
INFORMATION
One of the most
critical things you
need for virtual
warehousing is
centralized inventory
information and most
ERP systems offer
this functionality.
Multi- warehouse
module
ERP integration