Warehouse Management

A warehouse is a fundamental component of a logistics system. It is generally used for handling finished goods inventory. It is building or structure identified to serve customers in a specified geographical area or a group of customers. Traditionally the functions in a warehouse were considered to be,

• Receiving
• Identification and sorting
• Placing in storage
• Storage
• Retrieval from storage
• Order accumulation
• Packing
• Shipping
• Record keeping.

Through the various processes its objective is to achieve,

• A facility for storage of goods in a secured manner.
• Act as a buffer between demand and supply imbalance and maintain supplies without disruptions.
• Consolidation of material from various manufacturing locations – breaking up of bulk volumes in warded from manufacturers.
• Provide customers with the right mix of products at all times
• Achieve least logistics cost for a desired level of customer service.

Warehouse Management System (WMS)

The purpose of a Warehouse Management System (WMS) is to automate and refine the management of inventory in a warehouse, warehouse space, people working in the warehouse and the time available. With proper technical and operational management this automation can improve productivity customer service and asset utilization which help in faster payback of the investment in the system.

A WMS provides control at appropriate levels with proper configuration, so that the system can run with minimum supervision. It also provides analytical tools to re-assess processes on an on-going basis for optimization of operations.

Seven core functions performed by WMS

• Receive orders – generally from other systems.
• Define work for completion of orders in terms of picking, packing, shipping, receiving and put-away along with picking locations.
• Organise work by developing work packages for assignment to operators as they become available.
• Dispatch work – as operators become available, a real time process examines the work available, operators skills, equipment available, operators location and dynamically assigns a work package to the an operator.
• Control and monitor work.
• Provide feedback to host systems
• Maintain an audit trail at the individual material movement level.

The WMS market has been categorized into 3 tiers.

• Tier 1: provide highest level of functionality and are also expensive – SAP/ Manhattan Associates / Red Prairie / High Jump.
• Tier 2: comparatively less developed and cheaper software compromising on certain features but capable of addressing the needs of specific industries – Accellos/ Cadee Technologies / CDC software/ HK systems / Infor / Logility etc.
• Tier 3: tend to address smaller warehouses and do not include sophisticated features and are low in cost. But these tend to be technology leaders on newer platforms and support cutting edge software. Numerous such software are available in the market.

Warehouse Operating Principles

The operating principles of a warehouse encompass.

• Design criteria – addresses the features of the physical facility and material movement.
• The number of stories in the facility – elevators for movement of materials from one floor to another.
• Height utilization – the overall cubic space should be utilized in the best possible manner. The use of racking system is applied to store products up to the maximum height permissible by the lifting capabilities of material handling equipments and safety regulations.
• Product flow – to allow for straight product flow through the facility. Ideally products should be received at one end of the building, stored in the middle, and dispatched from the other end – this would streamline the operations.

• Handling Technology – focuses on the effectiveness and efficiency of material-handling technology for reducing multiple handling and economics of scale.
• Storage Plan to take into account the following.
• Product characteristics, particularly those pertaining to volume, weight, and storage. 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.
• Volume of movement is a major aspect – high-volume sales or throughput product should be stored in a location that minimizes the distance it is moved.

Warehouse Management Strategy

The warehousing network is critical to the achievement of success of the physical distribution of products. With proliferation of warehouses, the cost of logistics operation increases. So the strategies have to balance between cost and customer service level and remain competitive. The following warehouse management strategies are generally deployed in practice.

• Capacity Switching: The monthly demand pattern for a product in a given territory has an average value and also a seasonal fluctuation. Under such circumstances the capacity of a warehouse may be planned on the basis of average demand per month with the facility of using a public or contract warehouse for additional space requirement for seasonal peaks. This optimizes the investment required for the own warehouse facility.
• Hub Networking: Where the distribution network covers a large number of dealers, wholesalers and retailers, warehousing hubs are planned at a few strategic locations to serve the entire market. This ensures reduction in inventory levels and improved control on distribution.

A regional hub will cater to the needs of several states and will eliminate the need of having distribution centres in each state leading to.

• Reduction in operating cost
• Minimisation of transport cost
• Better control on inventory
• Improved customer service.
• Cobbling: This strategy works with players who are not competitors but cater to the needs of similar groups of users or customers and have a similar distribution strategy. The operating cost will reduce with economies of scale and faster customer service benefiting the cobbling partners.
• Outsourcing
• Most of the manufacturing firms do not have expertise in warehousing operations. This operation which does not constitute a core area for the manufacturers may be outsourced to service providers for improved productivity, efficiency and effectiveness.

Warehouse Layout

Space and layout planning of warehouse are critical for,

• Need for flexibility to adapt to dynamic business environment.
• Accessibility and locations on materials
• Customer service response requirements
• Safety
• Cost of labour

The space planning methodology will cover,

• Space planning for receiving and shipping: These are areas where transfer of control of the products takes place. Transfer of control of the products to the warehouse at the receiving are and to the carrier from the warehouse in the dispatch area take place. If these transfers do not take place efficiently, safely and accurately, the objective of customer satisfaction cannot be achieved.
• Space planning for storage: The storage activity consumes bulk of the space in a warehouse. Inadequate space can result in operational problems as accessibility of material, damage to material, lower productivity and safety issues. Excess space will result in poor utilization leading to higher costs. Quantitative assessment to be done to determine the space requirements by establishing maximum and average inventory levels.

The warehouse layout planning evolves out of the following objectives.

• To use space effectively
• To allow for the most efficient material handling
• To provide the most economical storage in relation to costs of equipments, use of space, damage to material, handling of labour and operational safety.
• To provide maximum flexibility in order to meet changing storage and handling requirements due to dynamics in the business environment.
• To make the warehouse a model of housekeeping.