WM TASK 2

FIRST SEMESTER OF 2022/2023 (A221)

BPMG3133 WAREHOUSE MANAGEMENT
GROUP A

INDIVIDUAL ASSIGNMENT 2

PREPARED FOR:
DR FARIZA BT AHMAD MAHYADIN@MAHIDIN

PREPARED BY: GIVEETHA A/P THANABALAN
MATRIC NUMBER: 281012

Table of Contents

1.0 BACKGROUND OF THE WAREHOUSE .......................................................... 1
2.0 SWOT ANALYSIS ................................................................................................ 1

2.1 Strengths ............................................................................................................ 1
2.2 Weaknesses ........................................................................................................ 2
2.3 Opportunities..................................................................................................... 2
2.4 Threats ............................................................................................................... 3
3.0 SIX KEY QUALITY INDICATORS .................................................................... 4
3.1 Shipment Accuracy ................................................................................................ 4
3.2 Inventory Accuracy ................................................................................................ 5

3.2.1 Inventory Location Accuracy (ILA)…………………………………………………...5
3.2.2 Inventory discrepancy Accuracy (IDA)…………………………………………….... 6
3.2.3 Inventory Liability Accuracy (ILA)…………………………………………………...7
3.3 Order fill rate ......................................................................................................... 8
3.4 Picking Accuracy.................................................................................................. 10
3.5 Put away Accuracy…………………………………………………………………12
3.6 Productivity Ratio………………………………………………………………………...13
3.6.1 Units handled per labor hours………………………………………………………...13
3.6.2 Order processing rate………………………………………………………………….13
3.6.3 Inbound turnaround performance……………………………………………………14
3.6.4 Warehouse order cycle performance…………………………………………………15
3.6.5 Storage cost per unit…………………………………………………………………...16
3.6.6 Handling cost per unit…………………………………………………………………16
3.6.7 Order processing cost per unit………………………………………………………..17
REFERENCES.................................................................................................................. 18

1.0 Background of the warehouse

Aegis Logistics is an India-based company that was established in 1956. In 1996–
1997, the company moved into the logistics sector, and in 2005, it separated its chemical
manufacturing company. Aegis is the global standard when it comes to transporting oil
and gas. The company offers a variety of supply chain services, including procurement,
inventory management, port management, logistics planning for transport by roadway and
pipeline, logistics for shipping, and supply chain management integration. In addition to
the fundamental rate, Aegis Logistics charges fees for a variety of services, such as jetty
maintenance, unloading, and loading. To meet the needs of its many commercial
customers in the steel, ceramics, glass, and pharmaceutical industries, Aegis Logistics
also imports, distributes and distributes substantial propane and liquid petroleum gas. At
present, the company offers a high-quality logistics facility at the Port of Mumbai, where
it also stores liquids and gases. To fund its logistical operations, the company collects
payments from importers who store their goods in the company's tanks before reloading
them onto trucks or ships.

2.0 SWOT Analysis

2.1 Strength

The uniqueness of any organization comes from its strengths. Resulting of
Recent Studies Aegis logistics enhanced operating margins and a rise in net
revenue. The logistics firm has seen a significant increase in quarterly profits,
from Rs 57.25 crore in the year-ago period to Rs 228.01 crore in the quarter
ending September 30, 2021. Secondly, Lineage logistics has success in emerging
markets beyond expectations. Aegis Logistics is well-equipped to expand into
emerging markets and succeed. By expanding out into emerging markets,
businesses have been able to diversify their exposure to economic downturns and
uptrends. Moreover, Aegis logistics has a high-quality workforce. The training
and education initiatives have produced a highly trained labor force. Aegis
Logistics creates highly skilled and motivated workers by heavily investing in
their training and advancement. Aegis Logistics stays consistently on high input of

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free funds. Aegis logistic’s ability to invest in growth-oriented activities is
facilitated by a healthy free cash flow. Furthermore, Aegis logistics utilizes an
excellent selection of brands. To branch out into introducing new products, a
company may find this brand portfolio to be quite helpful. Aegis Logistics has
spent a lot of time and money over the years developing a solid collection of
brands.

2.2 Weaknesses

SWOT analysis can help companies to enhance their weaknesses and
maximize their comparative benefit and strategic advantage. Aegis logistics have
strong and persistent competition. There is a need for increased funding for
channel expansion because the daily stock is higher than that of comparable
businesses. This may slow Aegis Logistics' development in the future. Moreover,
high rate of labor output. Aegis Logistics has to pay a lot greater than its
competitors to provide training and development for its employees because it
loses more individuals than other companies in the same field. Furthermore,
merchandise distribution and marketing. Despite the product's commercial
success, it lacks a well-defined market niche and selling point, providing an
alternative to challenges from competitors in the same market. In addition,
Inadequate and inefficient financial planning has been undertaken. Using its cash
flow more effectively would improve Aegis logistics' liquidity and liquid asset
ratios. Failure to successfully integrate companies with distinct workplace
cultures. As was already said, Aegis Logistics is good at combining small
companies. When companies with different work cultures try to come together, it
doesn't always work out.

2.3 Opportunities

Opportunities are ways firms can improve outcomes, revenue, and
profitability. A brand new approach to environmental policy. Every individual in
the company will have the same chances because of the new possibilities. This is a
fantastic chance for Aegis Logistics, Inc. to capitalize on technological
innovations and expand into new product lines. Moreover, alternate methods of

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taxation. Aegis Logistics may be able to enhance its profits by taking advantage of
new pathways made possible by the recent changes in tax policy. Apart from that,
having a deal with the government can help open up new markets. Aegis Logistics
can expand into emerging countries because of the government's support and
acceptance of new technological advancements. Furthermore, reaching new
clients through digital platforms. In recent years, the corporation invested heavily
in its digital site. Aegis Logistics was able to expand into new markets because of
this funding. Big data analytics enable Aegis Logistics better understand their
consumers' wants in the coming years. Finally, the recovery of the economy.
Aegis Logistics can gain new consumers and market share as the economy
recovers and consumer purchasing power rises.

2.4 Threats

Threats are things in the environment that can affect the growth of a company.
Taking legal steps. Legal action could be taken against the firm in other markets,
where laws and quality standards are always changing. Moreover, rises in the
number of goods. This may threaten Aegis Logistics' capacity to make money.
Aegis Logistics' ongoing profit growth is at risk due to a lack of competent labor
in some worldwide marketplaces. Furthermore, maintains a global presence.
Currency changes are a risk for Aegis Logistics since it works in numerous
countries, especially in unstable political environments. In addition, strong and
intense conflict. Over the past couple of years, the amount of competitors in the
sector has grown because it has been profitable. This has pushed down both
overall profits and revenues. Finally, compliance with legal obligations. Change
from one nation to the next, as an outcome of these shifts in market policy, Aegis
Logistics may become subject to a wide range of liability claims.

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3.0 The 6 key quality indicators

3.1 Shipment accuracy

 Definition
The percentage of order lines that were fulfilled without any mistakes being made.

 Formula
= ℎ × 100%

ℎ

 Question

Logistics fulfilled 100 orders from their warehouse, and 4 of them had processing
errors.

 Calculation

96
= 100 × 100%

= %
 Explanation of the answer

From the calculation above, the logistics achieved 96% of perfect order, and the order
lines were almost fulfilled.

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3.2 Inventory accuracy

 Definition
The percentage of warehouses that do not have any inventory inconsistencies.

 Formula
= ℎ × 100%



 Question
A company sells each phone case for $5. Then, those same 1,000 cases its have are
valued at $5,000, and the valuation of the 1,020 cases they supposed to have is
$5,100.

 Calculation

= 5000 × 100%

5100

= %

 Explanation of the answer
From the calculation above, the company inventory accuracy of the phone case was
98%, which is perfect accuracy.

3.2.1 Inventory Location Accuracy (ILA)

 Definition
Inventory location accuracy means the number of locations where there are no
discrepancies. It impacts a warehouse's capacity to fill consumer orders.

 Formula
= ℎ × 100%



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 Question
The number of storage locations without discrepancies is 56 and the total number of
storage locations verified is 170.

 Calculation
= 56 × 100%

170

= 33%

 Explanation of the answer
From the calculation above, the inventory location accuracy is 33%. The warehouse
needs more capacity to fulfill the customer’s order.

3.2.2 Inventory discrepancy Accuracy (IDA)

 Definition
Inventory discrepancy accuracy when evaluating inventory accuracy, it is essential to
look at line-item inconsistencies.

 Formula

= ℎ × 100%



 Question
The total number of items without discrepancies is given 450 and the total of line
items stored is 80.

 Calculation
450

= 80 × 100%
= 5.6%

 Explanation of the answer
From the calculation above, the inventory discrepancy accuracy is 5.6%, which is
quite poor.

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3.2.3 Inventory Liability Accuracy (ILA)

 Definition
ILA is generally used to figure out how much the 3PL provider has to pay. It also
consists of a loss ratio.

 Formula
= × 100%



 Question
The total value of discrepancies is 1200, meanwhile, the total value of the product
stored is 300.

 Calculation

1200
= 300 × 100%

= %

 Explanation of the answer
From the calculation above, the inventory liability is 40% which determines the 3PL
provider’s financial liability.

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3.3 Order fill rate

 Definition
Order fill rate estimates how many orders and lines can be fulfilled with the available
stock.

 Formula
a)
= × 100%

ℎ

 Question
A Group is interested in investigating order fulfillment rates at various times of the
year. The company hopes to determine the effectiveness of its fill rate over the past
quarter by using this method. In sum, 2,920 orders were placed by customers, and
2,300 were shipped to them during the quarter.

 Calculation

2300
= 2920 × 100%
= %

 Explanation of the answer

From the calculations above, the group gains 79% of the order fill rate, which is a

moderate score.

)
= × 100%

ℎ

 Question
On its Purchase Order #4589, NBC Company orders 10 items, each of which has one
order line. On March 1, the manufacturer does send out 7 line items, and on March
10, the other 3 will be sent out. What is the fill rate for this purchase order?

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 Calculation

7
= 10 × 100%

= %
 Explanation of the answer

From the calculations above, the order fill rate of NBC company was 70% for the
purchase order, which is the rate is moderate.

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3.4 Picking accuracy

 Definition
The percentage of error-free picking is known as the picking accuracy.

 Formula

a. ℎ = ℎ

ℎ

 Question
The Kenco group is a full-service logistics provider. A team of five workers from the
Kenco company has been picking for the past eight hours, and they have collected a
total of 500 items.

 Calculation

× =

500
ℎ = 40

= .

 Explanation of the answer
From the calculation above, The Kenco group workers picking rate per labor hours is
12.5, which is it’s a good picking rate.

b. ℎ = ℎ

ℎ

 Question
Weber logistics has 7 workers are working in picking area. Weber logistics received a
big order from a customer. So, the workers of Weber logistics picked a total of 700
units for 9 hours during that shift.

10

 Calculation

× =

700
ℎ = 63

= .

 Explanation of the answer
From the calculation above, the picking rate per labor hour of Weber logistics is 11.1.

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3.5 Put away accuracy

 Definition
Accurate putaway might reveal issues with the organization of freshly acquired stock.
The accuracy here should be very near to one hundred percent.

 Formula
=



 Question
As part of the put-away procedure, A logistic employs a total of 8 employees. The
logistic workforce is accountable for putting away a total of 3100 items of inventory,
however, they only managed to do 2950 inventory accurately.

 Calculation

1500
= 3100

= .
 Explanation of the answer

From the calculation above, the logistics managed to put away 0.48 accuracy of the
stock.

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3.6 Productivity ratio

3.6.1 Units handled per labor hours

 Definition
It's the number of units selected each hour. Units handled per labor hours are the most
common performance measurement used by warehouses.

 Formula

ℎ ℎ = ℎ ( )

ℎ

 Question
Sri Jaya company makes Rm800,000 per month from clothing manufacture and sales.
In a given month, the workers who sew the garments will put in 4000 of time.

 Calculation

800,000
ℎ ℎ = 4000

=

 Explanation of the answer
From the calculation above, Sri Jaya company gets 200 units handled per labor hour
by sewing the garments.

3.6.2 Order processing rate

 Definition
The efficiency with which orders are processed after being placed by consumers is
quantified by the order processing rate.

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 Formula
ℎ = ( )

ℎ

 Question
The Kodak company has five workers, and each one works a standard 40-hour work
week. Together, they have completed 12,000 units.

 Calculation

5 × 40 = 200 ℎ

12,000
ℎ = 200

= 60 ℎ

 Explanation of the answer
From the calculations we can see that Kodak company’s line items have been
processed 60 units per labor hour by their five workers.

3.6.3 Inbound turnaround performance

 Definition
The inbound turnaround performance metric measures how quickly products can be
put away into storage from the moment they arrive at the warehouse.

 Formula
= ℎ × 100%



 Question
You have shipped 500 orders, and only 325 of them were delivered on time and in
full.

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 Calculation

325
= 500 × 100%

= %

 Explanation of the answer
From the calculations above Aegis, logistics utilizes the order fill rate was 65%.

3.6.4 Warehouse order cycle performance

 Definition
Warehouse order cycle performance is the amount of time that passes between when a
customer sends an order to the warehouse and when it is analyzed, picked, packed,
labeled, and ready to ship.

 Formula
= ℎ × 100%

ℎ

Question
A warehouse does ship 1000 orders in 9 hours, the order cycle time is (9 hours, 60
minutes and 60 seconds) to improve delivery lead time. What is the order cycle time
of the warehouse for shipping orders?

 Calculation

= 9 ℎ × 60 × 60 × 100%

1000

= 32.4 × 100%
= 32.4%
 Explanation of the answer
The warehouse order cycle time for shipping orders is 32.4 seconds, meanwhile, the
total percentage of the shipping order is 32.4%.

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3.6.5 Storage cost per unit

Definition
 Formula

=

ℎ

 Question
The warehouse storage cost is a total of RM750,000 and the number of units for
RM500,000.

 Calculation
750,000

= 500,000

= 1.50

 Explanation of the answer
From the calculation above, the warehouse gets RM1.50 storage per unit.

3.6.6 Handling cost per unit

 Definition
The handling cost center shall compensate for all expenses involved throughout the
process of transferring goods into or out of the warehouse.

 Formula

= ℎ

ℎ ℎ ℎ

 Question
The company’s controller has made an average of how much of the expenses
associated with materials handling should be charged to the wall mirror and custom
window lines. The total amount of predicted units for the custom window is 7600 and

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the wall mirror is 10,100. The annual cost of materials handling is projected to be
$18,305.10. What is the material handling cost per unit?

 Calculation

, .
= ,

= .

 Explanation of the answer
From the calculation above, the company’s material handling cost per unit is 1.81.

3.6.7 Order processing cost per line item

 Definition
After a consumer placed an order, a series of steps known as order processing begins.
Assuming the goods are available, they must be collected from storage and sent to a
distribution center.

 Formula
=

ℎ

 Question
In a month received 300 orders of total line items and 6280 of total processing cost.
What are the order processing cost per line items.

 Calculation
6280

= 300
= .
 Explanation of the answer
From the calculation above, the order processing cost per line item is 20.93.

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Reference
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2022, from https://www.vskills.in/certification/tutorial/calculating-warehouse-storage-
costs-2/#:~:text=This%20is%20the%20total%20number,1.50%20per%20unit
Ecommerce metric refresher- order accuracy rate. Eshopbox. (n.d.). Retrieved December 1,
2022, from https://www.eshopbox.com/blog/order-accuracy-rate
Kane, M. (2022, October 27). What is inventory accuracy? Calculate & improve this KPI.
Cogsy. Retrieved December 1, 2022, from https://cogsy.com/inventory-
management/inventory-accuracy/
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warehouse-performance/
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https://www.optessa.com/order-cycle-time/
Take online courses. earn college credit. Research Schools, Degrees & Careers. Study.com.
(n.d.). Retrieved December 1, 2022, from https://homework.study.com/explanation/the-
total-materials-handling-cost-for-the-year-is-expected-to-18-305-10-if-the-materials-
handling-cost-should-be-allocated-to-the-wall-mirrors.html
Taras, J. (n.d.). Fill rate - supply chain metric. Retrieved December 1, 2022, from
http://www.supplychainmetric.com/fill-rate.html
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from https://www.indeed.com/career-advice/career-development/fill-rate

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