OUTLINE Warehouse Activities Warehouse Management How to supply an efficient warehouse. Warehouse Layout Warehouse Auditing RFID and Warehose Technologies

GLOBAL PURCHASING & MATERIALS HANDLING

CHAPTER VI

WAREHOUSE MANAGEMENT

OUTLİNE

Warehouse Activities

Warehouse Management

How to supply an efficient warehouse.

Warehouse Layout

Warehouse Auditing

RFID and Warehose Technologies

WAREHOUSE

A combination of two words ‘ware’ and

‘house’ which means that it is a place to

house or store wares like items or articles.

WAREHOUSE

Stores inventory for a period of time.

Storage of raw materials especially

Protection of goods or materials.

Turn over inventory rapidly as a distribution center.

Warehouses store,

Raw materials

Finished Goods

Supplies and spare parts.

WAREHOUSİNG MANAGEMENT

The objective of warehousing is to minimize cost

when realizing maximum customer service by

Providing timely customer service

Keeping track of items so that they can be found readily

and correctly.

Minimizing the total physical effort and thus the cost of

moving goods into or out of storage.

Providing communication with customers.

WAREHOUSE ACTİVİTİES

Receive Goods:

Identify goods

Dispatch goods to storage

Hold goods

Pick goods

Marshal the shipment

Dispatch the shipment

Operate an information system


Receive Goods: Accepting goods from outside

transportation or an attached factory.

Checking the goods against an order or bill of lading.

Checking the quantities

Checking for any damage

Inspection of Goods if required.


Identify Goods: Items are identified with the

appropriate stock keeping units(SKU) ,number(part

number) and the quantity. These data are recorded.

Dispatch Goods to Storage: Goods are sorted and

put away. The location of goods must be recorded.

Hold Goods: Storing goods by protecting from

environmental factors.


Pick Goods: Items are selected from storage and

brought to marshalling area. When realizing this,

items must be accessible.

Marshal the shipment: Checking for missing and

correct items,order records are updated if necessary.

Dispatch the shipment: Orders are packaged,

shipping documents are prepared and goods loaded

on the vehicle.


Operate an Information System: We need to know

what is in the warehouse, what came into storage in the

past, quantity, what will come into storage tomorrow,

when a particular good will come into storage e.t.c. This

system which we need can be very simple or may be a

sophisticated computer based system.

The complexity of system depends on number of SKUs

handled, the quantity, number of orders received and

fulfilled.


Maximum Use of Space: This means not only the floor

space but also the cubic space. But maximizing the space

necessitates capital cost.

Effective use of Labor and Equipment: Materials handling

equipment has the second – largest capital cost after

space cost and labor cost has the largest operating cost.

This situation represents a trade-off.

We can increase capital cost by investing machine but

labor costs reduces.


Maximum Use of Space(Cube Utilization): This means not only

the floor space but also the cubic space. But maximizing the

space necessitates capital cost. Cube utilization is the use of

space horizantally and vertically.

Effective use of Labor and Equipment(Accessibility): Materials

handling equipment has the second – largest capital cost after

space cost and labor cost has the largest operating cost.This

situation represents a trade-off.

We can increase capital cost by investing machine but labor

costs reduces.


We have to select the best mix of labor and equipment

to maximize the productivity of the operation.

Providing ready access to all SKUs should be easy to

identify and find material.

Most of the activity that goes on in a warehouse is

materials handling, so moving of the goods must

manage efficiently.

EFFECTİVE WAREHOUSE MANAGEMENT

Cube Utilization and Accessibility

Stock Location(Layout)

Order Picking and Assembly

Packaging

EFFECTİVE WAREHOUSE MANAGEMENT(CUBE UTİLİZATİON AND ACCESSİBİLİTY)

Goods are stored on the floor and in the space above.

Space is also required for aisles receiving and loading,

order picking , order assembly and offices.

Pallet positions verify the cube utilization.



Pallet position is related to

Floor storage

Whether pallets are stacked on eachother

Maximum stacking height(Ceiling height and

weight restriction, HSE regulations)


Accessibility means the ability to get goods with

a minimum of effort, Without moving other goods,

As long as all pallets contain the same SKU,

there will be no problem with accessibility.

When several SKUs are stored in the area, each

product should be accessible with a minimum

difficulty.


ProductA

ProductA

ProductA

ProductA

ProductA

ProductB

ProductB

ProductC

ProductC

ProductC

ProductD

ProductE

Utilization = 12 pallets / (5 x 3) spaces = 80%

EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)

Layout is concerned with the location of

individual items in the warehouse. There is no

single universal stock location system suitable

for all occasions.

Which system will be used depends on the type

of goods,the size of orders and too many

conditions similar to these ones.


Basic Layout Systems:

1. Group functionally related items together:

For example; putting all hardware items in the same

area of the warehouse. If functionally related items

are ordered together, order picking is easier. And

moreover, personnel is familiar with the location of

item.(Hardware items, bulk items)



2. Group fast moving items together: If fast-

moving items are placed close to the receiving or

shipping area, the work of moving them is

reduced.Slower-moving items can be placed in

more remote areas of the warehouse.



3. Group physically similar items together:

Physically similar items often require their own

particular storage facilities and handling

equipment.(Small packaged items, tires,

drums,cartons or frozen foods)



4. Locate working stock and reserve stock

seperately: Working stock can be located close to

shipping area whereas reserve stock used to

replenish the working stock can be located more

remotely. This allows order picking to occur in a

compact area.


Fixed Location: An SKU is assigned a permanent location and no

other items are stored there. This system reduces amount of

record keeping and it results in poor cube utilization. Fixed

Location Systems are often used in small warehouses.

Floating Location: Goods are stored wherever there is

appropriate space for them.The advantage of this system is its

improving cube utilization.On the other hand, it requires

accurate and up-to-date information on locations.So we have to

use computer-based systems in the warehouses using this

model.


Point-of-use storage: In a repetitive manufacturing and

JIT environment, inventory is stored close to where it will

be used.There several advantages of this model.

Materials are readily accessible to users at all times.

Material handling is reduced or eliminated.

Central storage costs are reduced.

This method is excellent as long as inventory is kept low

and personnel can keep control of records.


Central storage: As opposed to point-of-usage model, ın

this model all inventory is in one central location

Ease of control.

Inventory accuracy is easier to maintain.

Specialized storage can be used.

Reduced safety stock, since users do not need to carry

their own safety stock.

EFFECTİVE WAREHOUSE MANAGEMENT(ORDER PİCKİNG AND ASSEMBLY)

Once an order is received,

It is retrieved, assembled, and prepared for the shipment.

These processes contains,

Labor

Data Flow

Movements of goods or material.

There are several systems that can be used to

organize these processes.


Area System: The order picker circulates

throughout the warehouse selecting the items on

the order like in a supermarket. Then, the items are

taken to the shipping area.This system is generally

used in small warehouses where goods are stored in

fixed locations.


Zone System: The warehouse is divided into areas

and order pickers work only in their own area and

deliver materials to the marshalling area. Zones are

established by means of;

Type of storage

Type of material handling required.

Orders are prepared for the shipment in the

marshalling area.


Multi-order System: It is a mixed type of area and

zone systems. Multiple orders are gathered

together and all the items are divided by zone. It is

used where there are many items or many small

orders. Advantage Disadvantage

Area Simple to manage and control If order size increases, it becomes unwieldy

ZoneBetter to manage, because, process is

separated into small areas.It may increase personnel

cost

MultiMost suitable for the situation in which

there are many items. -

PHYSİCAL CONTROL

Inventory is tangible and always have a risk of

becoming lost, stolen and it is always open to

failure.

Thus, we need a system to make it difficult for

people to make mistakes or forget to update

records. It is maintained by means of;

A good part numbering system

A simple well documented transaction system

PHYSİCAL CONTROL(PART NUMBERİNG)

Each part has an unique number used only for that

part.

Every part must have descriptive part numbers to

assist in order picking and process.

PHYSİCAL CONTROL(TRANSACTİON)

1. Identify the item: Errors occur due to incorrect

identification.After receiving an item, the order

specifications(quantity ,part number and everything

about the order) must be identified.The location of item

must be accessible for everyone in the warehose system.

2. Verify quantity: Manual counting or Standart sized

containers.

3. Record Transaction: Recording all information.

4. Execute Transaction:Moving the goods.

ACCURACY OF İNVENTORY

Efficieny in a warehouse is up to the accuracy of

inventory, because you decide to buy or not, release

order or not and make a financial analyses according to

stock quantities.

If not so, there will be shortages or overstock of

materials,disrupted schedules,late deliveries, lost sales.

Especially part description, quantity and location must

be definetely accurate.


Causes of Inventory Errors

• Unauthorized withdrawal of material

• Unsecure stockroom

• Poorly trained personnel

• Inaccurate transaction recording

• Poor transaction recording system

-system should reduce the likelihood of human error

• Lack of audit capability


Tolerance:

AUDİTİNG İNVENTORY RECORDS

Periodic(Annual) Inventory Control: The aim is to correct

on hand balance. All types of material is counted and

compatability of shelf and system stocks are checked.

Cycle Counting: The aim is to find the reasons for error

and to prevent from them.Inventory is counted

throughout the year.Some items are counted frequently

depending on its value or past history problems.


Periodic(Annual) Inventory Control:

The primary purpose is to satisfy financial side.

Planner side is interested in all details of

material.

Financial side is concerned with only the total

value.


Periodic(Annual) Inventory Control:

This control method has some disadvantages:

It takes too much time,but is is wanted to be realized

in a short time.

Factory shutting down causes production loss.

Open to cover error with new errors.

People may not be familiar with the items

Labor and paperwork effort.


Cycle Inventory Control:

This control method has some advantages:

Timely correction of problems:

Reduction of loss production:

Training of personnel: Familiar with the items, fewer

errors , able to identify problems.


Counting Frequency:

Management establishes a rule for how many times an

item should be counted per year

e.g. ‘A’ items once per month, ‘B’ items quarterly, ‘C’

items twice per year

a mix of all items is counted every day

computerized systems can identify daily lists of items

to count

TECHNOLOGY APPLİCATİONS

Barcodes:

Paper labels which show a product code

RF Tags:

Radio Frequency

do not need to ‘see’ the item

These technological applications;

Reduce recording errors,

Improve transaction speed.

Barcode and RFID concepts will be discusses in Term Projects.

Documents

OUTLINE Warehouse Activities Warehouse Management How to supply an efficient warehouse. Warehouse Layout Warehouse Auditing RFID and Warehose Technologies