The document discusses the concept of warehousing and distribution, covering types, functions, costs, and strategies to optimize inventory management. It compares public and private warehouses, detailing their respective advantages and disadvantages while highlighting the importance of effective warehouse design and operational systems. Additionally, it addresses the factors influencing warehouse selection, including location, financial constraints, and operational mechanisms to enhance efficiency and customer service.

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

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

3. TYPES OF WAREHOUSE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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