Parabakaran Balasubramaniam is an experienced professional in environmental safety and health with over 15 years of experience and a master's degree in the field. The document discusses the economic and service benefits of various warehousing strategies, including consolidation and break bulk warehouses, as well as the significance of warehouse design principles. It explores different types of warehouses, such as private, public, and contract warehouses, and emphasizes the importance of choosing the right warehousing approach to meet logistics and operational needs.

1. EFFECTIVE WAREHOUSE
MANAGEMENT
BY
PARABAKARAN

2. Instructor Introduction
2
Professional Summary: With over 15 years of comprehensive experience in
Environmental Safety and Health (HSE), Parabakaran Balasubramaniam is a
seasoned professional with specialized expertise in delivering impactful training
programs. He holds a Master's Degree in Environmental Safety and Health from
the University Malaysia Pahang and has dedicated 5 years specifically to the
field of HSE training and consultancy.
Key Skills and Competencies:
Extensive knowledge in environmental safety regulations and compliance
standards.
Proven track record in designing and delivering engaging and effective HSE
training modules.
Strong understanding of risk assessment methodologies and hazard control
strategies.
Skilled in conducting safety audits and implementing corrective measures.
Excellent communication and interpersonal skills for effective training delivery

3. Warehouse
Management

4. Is it only a storage facility?
A warehouse is typically viewed as a place to store inventory.
However, in many logistical system designs, the role of the warehouse
is more properly viewed as a switching facility as contrasted to a
storage facility.
4

5. Benefits of Warehousing
Consolidation
Shipment consolidation is an economic benefit of
warehousing.
With this arrangement, the consolidating warehouse
receives and consolidates materials from a number of
manufacturing plants destined to a specific customer on a
single transportation shipment.
The benefits are the realization of the lowest possible
transportation rate and reduced congestion at a customer's
receiving dock.
5

6. Consolidation Warehouses
6

7. Consolidation Warehouses…
The primary benefit of consolidation is that it combines the
logistical flow of several small shipments to a specific market
area.
Consolidation warehousing may be used by a single firm, or a
number of firms may join together and use a for-hire
consolidation service.
Through the use of such a program, each individua1
manufacturer or shipper can enjoy lower total distribution cost
than could be realized on a direct shipment basis individually.
7

8. Break bulk warehouses
Break bulk warehouse operations are similar to
consolidation except that no storage is performed.
A break bulk operation receives combined customer orders
from manufacturers and ships them to individual
customers.
The break bulk warehouse sorts or splits individual orders
and arranges for local delivery.
Because the long-distance transportation movement is a
large shipment, transport costs are lower and there is less
difficulty in tracking.
8

9. Break bulk warehouses…
9

10. Processing/Postponement
Warehouses can also be used to postpone, or delay, production
by performing processing and light manufacturing activities.
A warehouse with packaging or labeling capability allows
postponement of final production until actual demand is known.
For example, vegetables can be processed and canned in
"brights" at the manufacturer.
Brights are cans with no pre-attached labels.
10

11. Processing/Postponement…
The use of brights for a private label product means that the item does
not have to be committed to a specific customer or package
configuration at the manufacturer's plant.
Once a specific customer order is received, the warehouse can
complete final processing by adding the label and finalizing the
packaging.
11

12. Processing/Postponement…
Processing and postponement provide two economic
benefits:
First, risk is minimized because final packaging is not
completed until an order for a specific label and package
has been received.
Second, the required level of total inventory can be reduced
by using the basic product (brights) for a variety of labeling
and packaging configurations.
12

13. Stockpiling
The economic benefit of stockpiling comes from the need of
seasonal storage.
For example, lawn furniture and toys are produced year-round
and primarily sold during a very short marketing period.
In contrast, agricultural products are harvested at specific times
with subsequent consumption occurring throughout the year.
Both situations require warehouse stockpiling to support
marketing efforts.
Stockpiling provides an inventory buffer, which allows production
efficiencies within the constraints imposed by material sources
and the customer.
13

14. Service Benefits
Five basic service benefits are achieved through warehousing:
◦ spot stock,
◦ assortment,
◦ mixing,
◦ production support, and
◦ market presence.
14

15. Spot Stock
Under spot stocking, a selected amount of a firm's product
line is placed or "spot stocked" in a warehouse to fill
customer orders during a critical marketing period.
In particular, manufacturers with limited or highly seasonal
product lines are partial to this service.
Rather than placing inventories in warehouse facilities on a
year-round basis or shipping directly from manufacturing
plants, delivery time can be substantially reduced by
advanced inventory commitment to strategic markets.
15

16. Spot Stock…
Utilizing warehouse facilities for stock spotting allows
inventories to be placed in a variety of markets adjacent to
key customers just prior to a maximum period of seasonal
sales.
Suppliers of agricultural products to farmers often use spot
stocking to position their products closer to a service-
sensitive market during the growing season.
Following the sales season, the remaining inventory is
withdrawn to a central warehouse.
16

17. Assortment
An assortment warehouse stocks product combinations in
anticipation of customer orders.
The assortments may represent multiple products from
different manufacturers or special assortments as specified
by customers.
In the first case, for example, an athletic wholesaler would
stock products from a number of clothing suppliers so that
customers can be offered assortments.
In the second case, the wholesaler would create a specific
team uniform including shirt, pants, and shoes.
17

18. Assortment vs. Spot Stock
The differential between stock spotting and complete line
assortment is the degree and duration of warehouse
utilization.
A firm following a stock spotting would typically warehouse
a narrow product assortment and place stocks in a large
number of small warehouses dedicated to specific markets
for a limited time period.
Distribution assortment warehouse usually has a broad
product line, is limited to a few strategic locations, and is
functional year-round.
The combined assortments also allow larger shipment
quantities, which in turn reduce transportation cost.
18

19. Mixing
In a typical mixing situation, truckloads of products are
shipped from manufacturing plants to warehouses.
Each large shipment enjoys the lowest possible
transportation rate.
Upon arrival at the mixing warehouse, factory shipments
are unloaded and the desired combination of each product
for each customer or market is selected.
When plants are geographically separated, overall
transportation charges and warehouse requirements can be
reduced by mixing.
19

20. Production Support
Production support warehousing provides a steady supply
of components and materials to assembly plants.
Safety stocks on items purchased from outside vendors may
be justified because of long lead times or significant
variations in usage.
The operation of a production support warehouse is to
supply or "feed" processed materials, components, and
subassemblies into the assembly plant in an economic and
timely manner.
20

21. Market Presence
While a market presence benefit may not be so obvious, it
is often cited by marketing managers as a major advantage
of local warehouses.
The market presence factor is based on the perception or
belief that local warehouses can be more responsive to
customer needs and offer quicker delivery than more
distant warehouses.
As a result, it is also thought that a local warehouse will
enhance market share and potentially increase profitability.
21

22. Warehouse Operating
Principles
Once it has been determined to use a warehouse, the next step is
designing it.
Whether the warehouse is a small manual operation or a large
automated facility, the following three principles are relevant:
◦ Design criteria,
◦ Handling technology, and
◦ Storage plan.
22

23. Design Criteria
Warehouse design criteria address physical facility characteristics and
product movement.
Three factors to be considered in the design process are:
◦ the number of stories in the facility,
◦ height utilization, and
◦ product flow.
23

24. Number of stories in the
facility
The ideal warehouse design is limited to a single story so
that product does not have to be moved up and down.
The use of elevators to move product from one floor to the
next requires time and energy.
The elevator is also often a bottleneck in product flow since
many material handlers are usually competing for a limited
number of elevators.
While it is not always possible, particularly in central
business districts where land is restricted or expensive,
warehouses should be limited to a single story.
24

25. Height utilization
Regardless of facility size, the design should maximize the
usage of the available cubic space by allowing for the
greatest use of height on each floor.
Most warehouses have 20- to 30-foot ceilings (1 foot =
12 inch; 1 inch = 2.54 cm), although modern automated and
high-rise facilities can effectively use ceiling heights up to
100 feet.
Through the use of racking or other hardware, it should be
possible to store products up to the building's ceiling.
Maximum effective warehouse height is limited by the safe
lifting capabilities of material-handling equipment, such as
forklifts.
25

26. Product flow
Warehouse design should also allow for straight product
flow through the facility whether items are stored or not.
In general, this means that product should be received at
one end of the building, stored in the middle, and then
shipped from the other end.
Straight-line product flow minimizes congestion and
confusion.
26

27. Handling technology
The second principle focuses on the effectiveness and efficiency of
material-handling technology.
The elements of this principle concern:
◦ movement continuity and
◦ movement scale economies.
27

28. Movement continuity
Movement continuity means that it is better for a material
handler or piece of handling equipment to make a longer
move than to have a number of handlers make numerous,
individual, short segments of the same move.
Exchanging the product between handlers or moving it
from one piece of equipment to another wastes time and
increases the potential for damage.
Thus, as a general rule, fewer longer movements in the
warehouse are preferred.
28

29. Movement scale economies
Movement scale economies imply that all warehouse
activities should handle or move the largest quantities
possible.
Instead of moving individual cases, warehouse activities
should be designed to move groups of cases such as pallets
or containers.
This grouping or batching might mean that multiple
products or orders must be moved or selected at the same
time.
While this might increase the complexity of an individual's
activities since multiple products or orders must be
considered, the principle reduces the number of activities
and the resulting cost.
29

30. Storage Plan
According to the third principle, a warehouse design should
consider product characteristics, particularly those pertaining to
volume, weight, and storage.
Product volume is the major concern when defining a warehouse
storage plan.
High-volume sales or throughput product should be stored in a
location that minimizes the distance it is moved, such as near
primary aisles and in low storage racks.
Such a location minimizes travel distance and the need for
extended lifting.
Conversely, low-volume product can be assigned locations that
are distant from primary aisles or higher up in storage racks.
30

31. A Sample Storage Area
31

32. Storage Plan…
Similarly, the plan should include a specific strategy for
products dependent on weight and storage characteristics.
Relatively heavy items should be assigned to locations low
to the ground to minimize the effort and risk of heavy
lifting.
Bulky or low-density products require extensive storage
volume, so open floor space or high-level racks can be used
for them.
On the other hand, smaller items may require storage
shelves or drawers.
The integrated storage plan must consider and address the
specific characteristics of each product.
32

33. Alternative Warehouse
Strategies
Warehouse alternatives include:
◦ (1) Private warehouses,
◦ (2) Public warehouses, and
◦ (3) Contract warehouses.
A private warehouse facility is owned and managed by the
same enterprise that owns the merchandise handled and
stored at the facility.
A public warehouse, in contrast, is operated as an
independent business offering a range of services -such
as storage, handling, and transportation- on the basis of a
fixed or variable fee.
Public warehouse operators generally offer relatively
standardized services to all clients.
33

34. Alternative Warehouse
Strategies...
Contract warehousing, which is evolving from the public warehouse
segment, provides benefits of both the private and public alternatives.
Contract warehousing is a long term, mutually beneficial arrangement
which provides unique and specially tailored warehousing and logistics
services exclusively to one client, where the vendor and client share the
risks associated with the operation.
Important dimensions that differentiate contract warehousing
operators from public warehouse operators are the extended time
frame of the service relationship, tailored services, exclusivity, and
shared risk.
34

35. Private Warehouses
A private warehouse is operated by the firm owning the
product.
The actual facility, however, may be owned or leased.
The decision as to which strategy best fits an individual firm
is essentially financial.
Often it is not possible to find a warehouse for lease that
fits the exact requirements of a firm.
35

36. Private Warehouses…
The major benefits of private warehousing include control,
flexibility, cost, and other intangible benefits.
Private warehouses provide more control since the
enterprise has absolute decision-making authority over all
activities and priorities in the facility.
This control facilitates the ability to integrate warehouse
operations with the rest of the firm's internal logistics
process.
36

37. Private Warehouses…
Private warehousing is usually considered less costly than
public warehousing because private facility costs do not
have a profit markup.
This perceived benefit, however, may be misleading since
public warehouses often are more efficient or may operate
at lower wage scales.
Private warehousing has also some intangible benefits,
particularly with respect to market presence.
A private warehouse with a firm's name on it may produce
customer perceptions of responsiveness and stability.
This perception sometimes provides a firm with a marketing
advantage over other enterprises.
37

38. Public Warehouses
On the basis of the range of specialized operations
performed, public warehouses are classified as
◦ (1) general merchandise,
◦ (2) refrigerated,
◦ (3) special commodity,
◦ (4) bonded, and
◦ (5) household goods and furniture.
Each warehouse type differs in its material handling and
storage technology as a result of the product and
environmental characteristics.
38

39. Public Warehouses…
General merchandise warehouses are designed to handIe
general package commodities such as paper, small
appliances, and household supplies.
Refrigerated warehouses (either frozen or chilled) handle
and maintain food, medical items, and chemical products
with special temperature requirements.
Commodity warehouses are designed to handle bulk
material or items with special handling considerations, such
as tires or clothing.
39

40. Public Warehouses…
Bonded warehouses are licensed by the government to
store goods prior to payment of taxes or duties.
They exert very tight control over all movements in and out
of the facility since government documents must be filed
with each move.
For example, cigarettes are often stored in bonded
warehouses prior to having the tax stamp applied.
This tactic saves the firm money by delaying tax payments;
it also reduces inventory value substantially.
40

41. Public Warehouses…
Finally, a household goods or furniture warehouse is designed to
handle and store large, bulky items such as appliances and furniture.
Of course, many public warehouses offer combinations of these
operations.
41

42. Public Warehouses…
From a financial perspective, public warehousing may have
a lower variable cost than comparable privately operated
facilities.
The lower variable cost may be the result of lower pay
scales, better productivity, or economy of scale.
Public warehouses certainly result in lower capital costs.
When management performance is judged according to
return on investment (ROI), the use of public warehousing
can substantially increase enterprise return.
42

43. Public Warehouses…
Public warehousing offers flexibility in that it is easy to
change the location, size, and number of facilities, allowing
a firm to quickly respond to supplier, customer, and
seasonal demands.
Private warehouses are relatively fixed and difficult to
change because buildings have to be constructed or sold.
Public warehousing can also offer significant scale
economies since the volume for each customer is leveraged
with that of other users.
This results in high-volume operations that can spread fixed
costs and justify more efficient handling equipment.
43

44. Public Warehouses…
A public warehouse can also leverage transportation by providing
delivery of loads that represent many public warehouse customers.
For example, rather than have vendor A and vendor B each deliver to a
retail store from their own warehouse, a public warehouse serving both
vendors could deliver a single combined load more efficiently.
44

45. Public Warehouses…
A public warehouse charges clients a basic fee for handling
and storage.
In the case of handling, the charge is based on the number
of cases or pounds handled.
For storage, the charge is assessed on the number of cases
or weight in storage during the month.
Such charges normally exceed the cost of private
warehousing if adequate private facility volume exists.
However, when economies of scale are not possible in a
private facility, public warehousing may be a low-cost
alternative.
45

46. Contract Warehouses
Contract warehousing combines the best characteristics of
both private and public operations.
The long-term relationship and shared risk result in lower
cost than typical public warehouse arrangements.
Contract warehouse operations can provide benefits of
expertise, flexibility, and economies of scale by sharing
management, labor, equipment, and information resources
across a number of clients.
46

47. Contract Warehouses…
Although it is common for contract warehouse operators to
share resources across clients in the same industry such as
grocery products, it is not common that direct competitors
will want to share resources.
Contract warehouse operators are also expanding the
scope of their services to include other logistics activities
such as transportation, inventory control, order processing,
customer service, and returns processing.
47

48. Contract Warehouses…
For example, Rich Products, a frozen food manufacturer in
Buffalo, New York, has increasingly utilized contract warehousing.
Since 1992, Rich has had a long term commitment with a
refrigerated warehousing and distribution company, Christian
Salvesen, for storage, handling, and distribution services at its
facilities in New York.
The nature of the arrangement benefits both parties and allows
Rich to expand its distribution network without incurring any
fixed facility cost.
48

49. Contract Warehouses…
Rich is assured that there will always be storage space for
its products.
Christian Salvesen doesn't have to be concerned with filling
space in its warehouses and can focus on providing service.
Moreover, the longer Rich Products utilizes Christian
Salvesen's services, the better the contract warehousing
firm will be able to understand Rich's business needs and
provide customized services.
49

50. Warehousing Strategy
Many firms utilize a combination of private, public, and
contract facilities.
A private or contract facility may be used to cover basic
year round requirements, while public facilities are used to
handle peak seasons.
In other situations, central warehouses may be private,
while market area or field warehouses are public facilities.
Each use of warehouse combinations will be discussed now.
50

51. Warehousing Strategy…
Full warehouse utilization throughout a year is a remote
possibility.
As a planning rule, a warehouse designed for full-capacity
utilization will in fact be fully utilized between 75 and 85
percent of the time.
Thus from 15 to 25 percent of the time, the space needed
to meet peak requirements is not utilized.
In such situations, it may be more efficient to build private
facilities to cover the 75 percent requirement and use
public facilities to accommodate peak demand.
51

52. Warehousing Strategy…
52
It may be more efficient to build private facilities to cover the 75
percent requirement and use public facilities to accommodate peak
demand.

53. Warehousing Strategy…
The second form of combined public warehousing may result
from market requirements.
A firm may find that private warehousing is justified at specific
locations on the basis of distribution volume.
In other markets, public facilities may be the least-cost option.
In logistical system design the objective is to determine whatever
combination of warehouse strategies most economically meets
customer service objectives.
53

54. Warehousing Strategy…
An integrated warehouse strategy focuses on two questions.
The first concerns how many warehouses should be employed.
The second question concerns which warehouse types should be
used to meet market requirements.
For many firms, the answer is a combination that can be
differentiated by customer and product.
Specifically, some customer groups may be served best from a
private warehouse, while a public warehouse may be appropriate
for others.
54

55. Warehousing Strategy…
Other qualitative factors that should be considered include:
(1) presence synergies,
(2) industry synergies,
(3) operating flexibility,
(4) location flexibility, and
(5) scale economies.
Each consideration and its rationale will be discussed.
55

56. Presence synergies
Presence synergies refer to the marketing benefits of
having inventory located nearby in a building that is clearly
affiliated with the enterprise (e.g., the building has the
firm's name on the door).
It is widely thought that customers are more comfortable
when suppliers maintain inventory in nearby locations.
Products and customers that benefit from local presence
should be served from private or contract facilities.
56

57. Industry synergies
Industry synergies refer to the operating benefits of
collocating with other firms serving the same industry.
For example, firms in the grocery business often receive
substantial benefits when they share public warehouse
facilities with other suppliers serving the same industry.
Reduced transportation cost is the major benefit since joint
use of the same public warehouse allows frequent delivery
of consolidated loads from multiple suppliers.
Public and contract warehousing increase the potential for
industry synergy.
57

58. Operating flexibility
Operating flexibility refers to the ability to adjust internal policies
and procedures to meet product and customer needs.
Since private warehouses operate under the complete control of
the enterprise, they are usually perceived to demonstrate more
operating flexibility.
On the other hand, a public warehouse often employs policies
and procedures that are consistent across its clients to minimize
operating confusion.
There are many public and contract warehouse operations that
have demonstrated substantial flexibility and responsiveness.
58

59. Location flexibility
Location flexibility refers to the ability to quickly adjust
warehouse location and number in accordance with seasonal or
permanent demand changes.
For example, in-season demand for agricultural chemicals
requires that warehouses be located near markets that allow
customer pickup.
Outside the growing season, however, these local warehouses
are unnecessary.
Thus, the desirable strategy is to be able to open and close local
facilities seasonally.
Public and contract warehouses offer the location flexibility to
accomplish such requirements.
59

60. Scale economies
Scale economies refer to the ability to reduce material-
handling and storage through application of advanced
technologies.
High-volume warehouses generally have greater opportunity to
achieve these benefits because they can spread technology's
fixed cost over larger volumes.
In addition, capital investment in automated equipment can
reduce direct variable cost.
Public and contract warehouses are generally perceived to
offer better scale economies since they are able to design
operations and facilities to meet higher volumes of multiple
clients.
60

61. Qualitative Decision Factors
61
Presence synergy and Operating flexibility is higher in Private
Warehouses.
Other factors are higher in Public Warehouses.

62. Planning the Distribution Warehouse
The initial decisions of warehousing are related to planning.
A master plan of the layout, space requirements, and
material-handling design should be developed first and a
specific site for the warehouse selected.
These decisions establish the character of the warehouse,
which, in turn determines the degree of attainable handling
efficiency.
62

63. Site Selection
Location analysis techniques are available to assist in
selecting a general area for warehouse location.
Once location analysis is completed, a specific building site
must be selected.
Three areas in a community may be considered for location:
◦ 1) commercial zones, 2) outlying areas served by motor truck
only, and 3) central or downtown areas.
The primary factors in site selection are the availability of
services and cost.
The cost of procurement is the most important factor
governing site selection.
63

64. Site Selection…
A warehouse need not be located in a major industrial area.
In many cities, one observes warehouses among industrial
plants and in areas zoned for light or heavy industry.
Interestingly, this is not a legal necessity because most
warehouses can operate under the restrictions placed on
commercial property.
64

65. Site Selection…
Beyond procurement cost, setup and operating expenses
such as rail sidings, utility expenses, taxes, insurance rates,
and highway access require evaluation.
These expenses vary between sites.
For example, a food distribution firm recently rejected what
otherwise appeared to be a totally satisfactory site because
of insurance rates.
The site was located near the end of a water main.
65

66. Site Selection…
During most of the day, adequate water supplies were
available to handle operational and emergency
requirements.
The only possible water problem occurred during two short
periods each day.
From 6:30 to 8:30 in the morning and from 5 to 7 in the
evening, the demand for water along the line was so great
that a sufficient supply was not available to handle
emergencies.
Because of this deficiency, abnormally high insurance rates
were required and the site was rejected.
66

67. Site Selection…
Several other requirements must be satisfied before a site is purchased.
The location must offer adequate room for expansion.
Necessary utilities must be available.
The soil must be capable of supporting the structure, and the site must
be sufficiently high to afford proper drainage (su akişina izin
verme).
67

68. Product-Mix Considerations
The design and operation of a warehouse are related directly to the
character of the product mix.
Each product should be analyzed in terms of annual sales, stability of
demand, weight, and packaging.
It is also desirable to determine the total size and weight of the average
order processed through the warehouse.
These data provide necessary information for determining
requirements in warehouse space, design and layout, material-handling
equipment operating procedures, and controls.
68

69. Expansion
Future expansion is often neglected when an enterprise
consider initial establishment of its warehouse facilities.
Inclusion of a warehouse into the logistical system should
be based partially on estimated requirements for future
operations.
Well-managed organizations often establish five- to ten-
year expansion plans.
Such expansion considerations may require purchase or
option of a site three to five times the size of the initial
structure.
69

70. Expansion…
Special construction is often considered to ease expansion without
seriously affecting normal operations.
Some walls may be constructed of semi-permanent materials to allow
easy removal.
Floor areas, designed to support heavy movements, are extended to
these walls in a manner that facilitates expansion.
70

71. Selection of Material-Handling
System
A material-handling system is one of the initial
considerations of warehouse planning.
Movement is the main function within a warehouse.
Consequently, the warehouse is viewed as a structure
designed to facilitate maximum product flow.
It is important to stress that the material-handling system
should be selected early in the warehouse design stage.
71

72. Warehouse Layout
Layout of a warehouse depends on the proposed material
handling system and requires development of a floor plan to
facilitate product flow.
It is difficult to generalize about warehouse layouts since they
must be refined to fit specific needs.
If pallets are to be utilized, the first step is to determine the pallet
size.
A pallet of nonstandard size may be desirable for specialized
products, but whenever possible, standardized pallets should be
used because of their lower cost.
72

73. Warehouse Layout…
The most common sizes are 40 by 48 inches and 32 by 40 inches.
In general, the larger the pallet load, the lower the cost of
movement per package over a given distance.
The packages to be placed on the pallet and the related patterns
will determine, to a certain extent, the size of pallet best suited
to the operation.
Regardless of the size finally selected, management should adopt
one size for the total operation.
73

74. Warehouse Layout…
The second step in planning a layout involves the pallet
positioning.
The basic method of positioning pallets in a mechanized
warehouse is a ninety-degree, or square, placement.
Square placement means that the pallet is positioned
perpendicular to the aisle.
The square method is widely used because of layout ease.
74

75. Pilferage Protection
Protection against theft of merchandise has become a major
factor in warehouse operations.
Such protection is required as a result of the increased
vulnerability of firms to riots and civil disturbances.
All normal precautions employed throughout the enterprise
should be strictly enforced at each warehouse.
Security begins at the fence.
As standard procedure, only authorized personnel should be
permitted into the facility and surrounding grounds and entry
to the warehouse yard should be controlled through a single
gate.
75

76. Pilferage Protection…
Without exception, no private automobile-regardless of
management rank or customer status-should be allowed to
penetrate the yard adjacent to the warehouse.
To illustrate the importance of the stated guidelines, the
following actual experience may be helpful.
A particular firm enforced the rule that no private vehicles
should be permitted in the warehouse yard.
Exceptions were made for two handicapped office
employees.
76

77. Pilferage Protection…
One night after work, one of these employees accidentally
discovered a bundle taped under one fender of his car.
Subsequent checking revealed that the car was literally a
delivery truck.
The matter was promptly reported to security, which
informed the employee not to alter any packages taped to
the car and to continue parking inside the yard.
Over the next several days, the situation was fully
uncovered, with the ultimate arrest and conviction of
several warehouse employees who confessed to stealing
over $100,000 of company merchandise.
77

78. Pilferage Protection…
The firm would have been better off purchasing a small
vehicle to provide transportation for the handicapped
employees from the regular parking lots to the office.
Shortages are always a major consideration in warehouse
operations.
Many are honest mistakes in order selection and shipment,
but the purpose of security is to restrict theft from all
angles.
The majority of thefts occur during normal working hours.
78

79. Pilferage Protection…
Computerized inventory control and order processing
systems help protect merchandise from being carried out of
the warehouse doors.
No items should be released from the warehouse unless
accompanied by a computer release document.
If samples are authorized for use by salespersons, the
merchandise should be separate from other inventory.
79

80. Pilferage Protection…
Not all pilferage occurs on an individual basis.
Numerous instances have been discovered where organized
efforts between warehouse personnel and truck drivers
resulted in deliberate over-picking or high-for-low-value
product substitution in order to move unauthorized
merchandise out of the warehouse.
Employee rotation, total case counts, and occasional
complete line-item checks can reduce vulnerability to such
collaboration.
80

81. Product Deterioration
Within the warehouse, a number of factors can reduce a
product or material to a non-usable or non-marketable
state.
The most obvious form of product deterioration is damage
from careless transfer or storage.
Another major form of deterioration is non-compatibility of
products stored in the same facility.
81

82. Product Deterioration…
The primary concern is deterioration that results from improper
warehouse work procedures.
A constant concern is the carelessness of warehouse employees.
In this respect, the forklift truck may well be management's worst
enemy.
Regardless of how often operators are warned against carrying
overloads, some still attempt such shortcuts when not properly
supervised.
82

83. Product Deterioration…
In one situation, a stack of four pallets was dropped off a
forklift truck at the receiving dock of a food warehouse.
Standard procedure was to move two pallets per load.
The value of the damaged merchandise exceeded the
average daily profit of two supermarkets.
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.
83

84. Part of firms logistics system that stores products at and between point of
origin and point of consumption.
Term “Warehousing” is referred as transportation at zero miles per hour
Warehousing provides time and place utility for raw materials, industrial
goods, and finished products, allowing firms to use customer service as a
dynamic value-adding competitive tool.

85. DESIGN CONSIDERATION
Ideal Facility for Pure Supplier Consolidation
(Full Pallet Movement)
Warehouse Space Requirements

86. PRINCIPLES OF WAREHOUSE LAYOUT DESIGN

87. WAREHOUSE PROCESS
Put-away
•Identify Product
•Identify Product Location
•Move Products
•Update Records
Storage
•Equipment
•Stock Location
–Popularity
–Unit Size
–Cube
Shipping Preparation
•Packing
•Labeling
•Stacking
Order Picking
•Information
•Walk & Pick
•Batch Picking
Shipping
•Schedule Carrier
•Load Vehicle
•Bill of Loading
•Record Update
RECEIVING
•Schedule Carrier
•Unload Vehicle
•Inspect for damage
INPUT
OUTPUT

88. OBJECTIVES OF EFFICIENT WAREHOUSE OPERATIONS
• Provide timely customer service.
• Keep track of items so they can be found readily & correctly.
• Minimize the total physical effort & thus the cost of moving goods into &
out of storage.
• Provide communication links with customers

89. Benefits of Warehouse Management
◦ Provide a place to store & protect inventory
◦ Reduce transportation costs
◦ Improve customer service levels
Complexity of warehouse operation depends on the number of SKUs handled &
the number of orders received & filled.
Most activity in a warehouse is material handling.

90. • Capital costs
—Costs of space & materials handling equipment
• Operating costs
—Cost of labor
—Measure of labor productivity is the number of units that an operator
can move in a day
COSTS OF OPERATING A WAREHOUSE

91. WAREHOUSE ACTIVITIES
• Receive goods
• Identify the goods
• Dispatch goods to storage
• Hold goods
Pick goods
Marshal shipment
Dispatch shipment
Operate an information system

92. • Accepts goods from
‒ Outside transportation or attached factory & accepts responsibility
• Check the goods against an order & the bill of loading
• Check the quantities
• Check for damage & fill out damage reports if necessary
• Inspect goods if required
Receive goods

93. ‒ items are identified with the appropriate stock-keeping unit (SKU)
number (part number) & the quantity received recorded
Identify the goods
Dispatch goods to storage
‒ goods are sorted & put away
Hold goods
‒ goods are kept in storage & under proper protection until needed

94. Pick goods
‒ items required from stock must be selected from storage & brought to
a marshalling area
Marshal the shipment
‒ goods making up a single order are brought together & checked for
omissions or errors; order records are updated

95. Dispatch the shipment
‒ orders are packaged, shipping documents are prepared, & goods
loaded on the vehicle
Operate an information system
‒ a record must be maintained for each item in stock showing the
quantity on hand, quantity received, quantity issued, & location in the
warehouse

96. Maximize productivity & minimize cost,
warehouse management must work with the
following
• Maximize use of space
– space is the largest capital cost
• Effective use of labor & equipment
– labor is the largest operating cost
– material handling equipment is the second largest capital cost

97. FACTORS INFLUENCING EFFECTIVE USE OF
WAREHOUSES
• Cube utilization and accessibility
• Stock location
• Order picking and assembly
• Physical Control & Security - Elements

98. Cube utilization and
accessibility
‒ Goods stored not just on the floor, but in the cubic space of the
warehouse; warehouse capacity depends on how high goods can be
stored
‒ Accessibility means being able to get at the goods wanted with a
minimum amount of work

99. Cube utilization and accessibility
continued…

100. Stock Location
• Objectives
– To provide the required customer service
– To keep track of where items are stored
– To minimize effort to receive, put away, and retrieve items
• Basic Stock Locating Systems
– Group functionally related items together
– Group fast-moving items together
– Group physically similar items together
– Locate working stock and reserve stock separately

101. • Fixed Location
– SKU assigned a permanent location, & no other items are stored there
– Fixed-location systems usually have poor cube utilization
– Usually used in small warehouses; throughput is small, & there are few SKUs
• Floating (Random) Location
– Goods stored wherever there is appropriate space
– Advantage is improved cube utilization
– It requires accurate and up-to-date information
– Warehouses using floating-location systems are usually computer-based
Stock Location continued…

102. Stock Location continued…
• Two other systems sometimes used are
– Point-of-use storage
• Inventory stored close to where it will be needed
• Used in repetitive manufacturing & JIT systems
– Central storage
• Contains all inventory in one central location

103. • Advantages of Point-of-use Storage
– Materials are readily accessible to users
– Material handling is reduced or eliminated
– Central storage costs are reduced
– Material is accessible all the time
Stock Location continued…

104. • Advantages of Central Storage
– Ease of control
– Inventory record accuracy is easier to maintain
– Specialized storage can be used
– Reduced safety stock, since users do not need to carry their own safety stock
Stock Location continued…

105. Order Picking and Assembly
• When an order is received, items must be obtained from the
warehouse, grouped, & prepared for shipment, systems used
– Area system
– Zone system
– Multi-order system

106. Order Picking and Assembly
continued…
◦ Area system
– Order picker circulates throughout warehouse selecting items on
an order -- order is ready to ship when order picker is finished
◦ Zone system
– Warehouse is divided into zones, & each picker works only in an
assigned zone -- order is divided by zone, & the items from each
zone are sent to the marshaling area

107. Order Picking and Assembly
continued…
◦ Multi-order system
– Same as the zone system, except that each picker collects items
for a number of orders at the same time

108. PHYSICAL CONTROL & SECURITY - ELEMENTS
◦ Good part numbering system
◦ Simple, well-documented transaction system
– Identify the item
– Verify the quantity
– Record the transaction
– Physically execute the transaction
◦ Limited access
– Inventory must be kept in a safe, secure (locked) place with limited
general access
◦ Well-trained workforce

109. WAREHOUSE SAFETY

110. More than
145,000
people work in over
7,000
warehouses
Image Source: Business Solutions

111. IMAGINE
THE
INJURIES
?

112. TOP
3
CAUSES OF
INJURY
• DOCKS
• FORKLIFT
S
• CONVEYO

113. HAZARD: INJURIES CAN HAPPEN WHEN FORKLIFTS
ARE DRIVEN OFF THE DOCK, OR
PRODUCT/EQUIPMENT FALLS ON EMPLOYEES.
SOLUTIONS
Drive forklifts slowly on docks
Secure dock plates, checking capacities Keep clear of
dock edges
Provide visual warnings near dock edges

114. 100 killed &
95,000 injured
EVERY YEAR
while operating forklifts

115. PROCEDURES FOR
PICKUP
MAINT
AIN
SAFE
CLEARA
NCES
FOR
AISLES

116. MUSCULOSKELETAL
DISORDERS BY
REPETITIVE
POSTURES OR
MOTIONS.
SOLUTIONS
Constantly inspect conveyors
Check that pinch points are protected Train
employees on conveyor procedures
Maintain proper lighting around area
Image Source: Google Images

117. P
R
E
V
E
N
T
I
O
N
EDUCATE
On proper safety
measures
TRAIN
Workers on warehouse
equipment
ENSURE
Fire, lockout, and
equipment procedures
are in place
ESTABLISH

118. If you don't follow the rules…

119. IT WILL COST YOU
$38,000
$150,000
direct costs
indirect costs

120. QUICK
TIP
S
ENSURE…
• Floors are swept, aisles are
clear
• Lifting is done correctly, avoiding
repetitive movements
•
• Ladders are inspected before use
Hazard zones are clearly marked
• All employees are alert when working
with and next to machinery

121. SAFETY
isn’t an option,
it’s the
LAW

122. NEXT…
Image Source: Google Images
TOP
10CI
O
T
ccupat
A
ional Sa
T
fety an
I
d

123. TOP
10
1. Forklifts
2. Hazard
Communication
3. Electrical, wiring
methods
4. Electrical, system
design
5. Guarding floor &
wall openings and holes
6. Exits
7. Mechanica
l power
transmissi
on
8.
Respirator
y
protection
9. Lockout/
tagout
10.
CITATIONS

124. FOR A FULL LIST OF REGULATIONS
PLEASE VISIT,
osha.gov

125. IoT and the
Smart
Warehouse

126. IoT is Revolutionizing Warehouse
& Supply Chain Operations
You may have seen
commercials and online
advertising for everything from
predictive maintenance to
home automation using IoT. It
is a simple, largely intuitive
concept that is helping to
digitally transform the supply
chain and the way consumers
live. From home automation
in smart homes to smart cities
and DDOS attacks, IoT is in the
news frequently these days.

127. You have probably heard of it, but do you know what IoT is?
Cyberphysical systems incorporate Internet connectivity with the ability
to sense and react to the world in innovative and highly useful ways.
Physical devices are now being embedded with electronics, sensors,
software and actuators and can be connected to the Internet so that data
can be exchanged. According to McKinsey Global Institute, IoT devices
must be able to monitor their environment and report their status,
receive directions and act on information they receive.
IoT: What is it?

128. The basic components that make an item or device part of
the IoT are:
• Sensors: needed to
track and measure
activity
• Internet connectivity of
some type
• Processors to provide
computing power

129. Computers are embedded within the
physical devices and each device is
uniquely identifiable. This network,
the Internet of Things makes it
possible for physical devices and
objects to be sensed and controlled
remotely across the existing network
infrastructure. This provides an
increased number of opportunities for
direct integration of devices in the
physical world into computer-based
systems. Beyond consumer
applications, IoT is highly useful in
industrial Internet applications as
well. As with all things Internet,
security challenges abound but have
not diminished the adoption rate of
the billion devices in the IoT and
mobile world.

130. With wireless Internet and sensor networks, real time data is abundant for
use on Internet of Things platforms to empower greater efficiency in
items including home appliances, smart city projects, consumer
electronics, smart buildings and much more.
Here is some IoT news: IoT is BIG in the supply chain industry and
growing fast!

131. Why has IoT become more popular and widespread in use
across the supply chain?
• As broadband Internet has become more widely available and
affordable, the cost of connecting to the Internet has decreased.
• Technology costs have gone down over the past few years and IoT
devices have become more accepted and affordable
• Having access to real time data from IoT can help to identify potential
risks in the supply chain, provide real time traceability and enable
notification when shipments will be late due to weather and other
delays. These improvements help reduce costs and enhance labor
productivity, efficiency and accuracy.

132. Here are some other reasons for the use of IoT in supply
chain operations:
• Enables real time visibility
• Helps companies ensure
compliance with chain- of-custody
regulations, especially for sensitive
cargo
• Facilitates integration between
systems to enable a more
seamless supply chain
• Enables performance
measurement and monitoring so
that malfunctions can be detected
• Improves forecasting accuracy
• Helps to prevent loss and damage
of goods
• Streamlines coordination between
warehouse operations and
logistics providers
• Increases efficiency
• Provides real time data to provide
insight to support strategic and
tactical decisions
• Able to integrate forecast weather
changes with route schedules to
enable better delivery decisions
• Monitors health of goods during

133. Here are some other reasons for the use of IoT in supply
chain operations:
• Improves forecasting accuracy
• Helps to reduce equipment
damage
• Can capture load discrepancies
and notify all involved parties in
real time
• Enables better track and trace of
inventory
• Enables continual feedback in real
time for warehouses that “live-
unload” trailers
• Can provide directions and
feedback to truck drivers
regarding conditions and trailer
delivery times
•Monitors health of goods during
transport to help prevent spoilage
•Aids in creation of error-free
processes
•Can provide an item’s precise
location, reducing the time it takes
to find inventory
•Can monitor days to expiration of
goods, useful for preventing spoilage
and waste
•Ideal for asset management such as
for fleets of trucks and field service
vehicles

134. The IoT World Includes the
Warehouse
IoT devices are considered one of
the most likely type of technology
investments in the warehouse
according to “Building the Smarter
Warehouse: Warehousing 2020”, a
report by industry leader Zebra
Technologies. As omnichannel retail
and the consumer demand for fast
delivery continues to boom,
warehouse professionals report
more interest in expanding their
use of technology in the
warehouse.

135. According to the Zebra Technologies survey of IT and operations
professionals in North America, in companies with a minimum of $15
million in annual revenues, 90% of respondents anticipate using mobile
computers or tablets and 85% project using RFID by 2020.

136. Emerging Technologies Including IoT
Revolutionize Warehouse
Operations
Why are emerging technologies such as IoT becoming so popular? For one
thing, they provide the free flow of real time data. Information
technology experts can then analyze data and use the information from
smart devices to help refine processes, streamline operations and
improve forecast accuracy, for
example. IoT generates huge amounts of new data, more than is currently
used.

137. Other uses for IoT include the
essential nature of warehouse
management, accurate inventory
management. While always critical,
inventory management accuracy
has taken on an entirely new level
of importance. This is largely due to
consumers’ penchant for online
shopping. In order to facilitate e-
commerce omnichannel retail, it is
essential that consumers have real
time accurate information
regarding the status and
availability of items for purchase.
This is of strategic importance as it
helps to reduce out- of-stock
conditions, improve customer
service and aid with regulatory
compliance.

138. Consumers who order online only to arrive at brick and mortar retailers
only to find that their orders are incomplete with backordered items are
not happy customers. This directly affects the likelihood that they will
purchase from those retailers in the future.

139. The IoT World of the “Smart
Warehouse”
What is driving the adoption of smart warehousing? Consumer
expectations. Today’s consumer expects immediate gratification. They
want to point, click and receive their orders in days or sometimes hours.

140. The traditional supply chain was not designed to handle a high volume of
small consumer orders for immediate delivery. Manufacturers, retailers,
warehouses and logistics providers are all struggling to adjust to meet
these needs. To be sure, everything is on the line.
When consumers are dissatisfied with their buying or delivery
experience, they are not shy about sharing their impressions of brands
via social media. News can spread like wildfire. Because of this and the
fickleness of consumers, companies are adjusting processes, people
needs and technology to meet the needs and expectations of demanding
consumers.

141. Investments in the latest technologies are powering transformative
changes across supply chain networks. Warehouses are being re-
imagined as hubs to increase efficiency and speed across the entire
supply chain. Using devices such as wearables, sensors and radio-
frequency identification tags (RFID), warehouse managers now have
real time visibility of the location and progress of inventory. Wearable
devices free up warehouse workers to move anywhere in the
warehouse.
This enables warehouse workers to access information and instructions
without being constrained by the location of workstations.

142. IoT devices help to reduce the use of
manual labor, incidence of errors and
increase the speed of processing
goods. Warehouse errors are
costly. Inaccurate operations and
errors require more labor to remedy,
adding unnecessary costs. With the
deluge of data available from IoT
devices including wearables, retailers
and other supply chain partners now
have vital insight into inventory and
supply chains. This data can be used
to build more effective processes,
more efficient warehouses and
provide insight that helps to drive
costs down.

143. Here is a look at two
technologies being
tested or used in
smart warehouses:

144. IoT Innovation of Smart Glasses
Talk about smart devices, an ingenious idea, smart glasses enable
warehouse laborers to work hands free, ideal for busy warehouse
operations. Augmented reality provides essential information regarding
the process and helps warehouse workers to learn quickly. No specific
infrastructure is typically required.

145. Popular in order picking, the use of smart glasses, also known as vision
picking helps to achieve productivity improvements of 15% on average.
How does this work? Warehouse workers can see visual displays of
order picking instructions and information on item location in visual
displays on the smart glasses. The smart glasses also show the
warehouse worker where the items need to be placed on the cart.
The smart glasses also show the warehouse worker where the items
need to be placed on the cart. Order pickers are then freed up from
carrying and reading paper instructions or devices so that they can
perform their duties more efficiently. In international trials, warehouse
workers found smart glasses to be user friendly, reducing onboarding
and training times by half.
@picav
i

146. IoT-based Robotic Systems
Introducing IoT Robotic
Carts: Autonomous Mobile
Robots (AMR)
Autonomous mobile robots
often referred to as AMR can
move independently and utilize
sensors and cameras for help
with navigation. Different from
Automated Guided Vehicles
(AGV), AMR do not operate on a
fixed path. AMR sense and
perceive their environment, find
their specific position within it,
analyze and then execute
movement. AMR are most
frequently used to move or
handle product within the
warehouse.

147. Robots are designed to handle a variety of functions within the
warehouse facility. Some robots are coordinated by software to
transport and move shelving to workstations while others carry shelving
bays to pickers at workstations. Some autonomous robots help
warehouse workers by minimizing the travel of the order picker. Some
types of robots work alongside human warehouse workers and can
detect different human languages. The robot can contain an integrated
scanner that can confirm the picked item to ensure nearly perfect pick
and put operations.
Some robots also contain sensors and software to enables them to track
data so that feedback can be provided to workers, both positive and
negative, thereby encouraging improvement.

148. Conclusion
It may seem to you as if we live in an Internet of Everything IOE
world today. Between smart grids, your connected car, building
automation and all the smart devices on the Internet of Things
market, it is hard to get away from all the innovation of the fourth
industrial revolution. New business models are being developed
to improve customer experiences. Keeping Internet of Things
secure is a top priority to safeguard personal data.
In the world of warehousing, IoT has taken hold. To speed up the
handling, storage and shipping of inventory, warehouses are
relying more on IoT-enabled devices including wearables, smart
glasses, AMR and AGV. Robotic and artificial intelligence solutions
are being utilized in warehouse and logistics operations in
concert with warehouse workers to improve performance and
reduce errors. Facility managers now can rely on Chuck to be the
workhorse of their operation and reduce their dependence on
seasonal or unreliable workers.
It’s a different world out there everyone. We all need to get
SMART…

149. Questions ?

150. THANK YOU