Fundamentals of Warehouse Operation - chapter 1

FUNDAMENTALS OF
WAREHOUSE
OPERATION



TOPIC 1:

OVERVIEW OF WAREHOUSING

1.1 Explain the concept of warehousing

1.1.1 Define Warehousing

A warehouse is a large building or a place for receiving, storage, issuing and
distribute raw materials and goods. Holding or preserving goods in huge
quantities from the time of their purchase or production till their actual use or
sale.

Usually large plain buildings in industrial areas of cities and towns and come
equipped with loading docks to load and unloads item from transportation
(trucks), or sometimes are loaded directly from railways, airports, or seaport.

In many instances, many manufacturing facility has an attached warehouse,
where their manufactured goods are stored until shipped.

Warehouses are used by manufacturers, importers, exporters, wholesalers,
transport businesses, customs, etc.

The person in-charge of warehouse is called WAREHOUSE-KEEPER

1.1.2 Describe The Characteristics of Warehousing

1) Strategic Location
- Site selection is driven by service availability and cost factors.
Identify broad geography where an active warehouse meets service,
economic and strategic requirements
- Strategically placed location, such as in ports, airports, and train
stops to facilitate the movement of goods. Good infrastructure such
as roads and communication systems and requires a large area
around it to facilitate loading or unloading.

2) Material Handling

Effective materials management seeks to minimize materials handling, at
the same time making effective use of time and space (e.g., stacking goods
high in a warehouse, transferring them rapidly to and from factory or
transport). The activities associated with materials handling can be
performed by manual labor, or by simple or sophisticated equipment.

Coyle and others (2003) state that the general objectives of material
handling are:

• Maximize warehouse or terminal capacity
• Minimize non-storage or stacking space (e.g., aisle space)
• Reduce the number of handling times
• Effective and safe working conditions
• Minimize manual labor
• Enable effective overall logistics flow
• Reduce cost

3) Design and Layout

Warehouse design criteria address physical facility characteristics and
product movement.

The room is spacious and airy warehouse allows items tidy and neatly
arranged by the type and quantity.

Layout of a warehouse depends on the proposed material handling system
and requires development of a floor plan to facilitate product flow.

If pallets are to be utilized, the first step is to determine the pallet size

4) Management System
Each item is removed or placed in storage must be properly recorded in the
book of stock, card stock or a computer system.

5) Types of building
Each warehouse must be built according to the goods stored. Chill room
suitable for storing frozen goods is perishable, such as fish, meat, fruits and
vegetables.
Warehouse without a roof used to store granite, marble and sand.
Warehouse roof without walls can be used to store wood and boards.

6) Safety & Insurance
Warehouses need to prioritize the safety factor to prevent theft, fire,
damage, and loss items. Insurance must be taken to protect the
warehouse and the goods of the unexpected risks such as theft, fire etc.

1.1.3 Explain Roles of Warehouse

1) Storage of goods

The basic function of warehouses is to store large stock of goods. These
goods are stored from the time of their production or purchase till their
consumption or use.
This is to ensure continuous production/large scale production.

2) Protection of goods/risk bearing

A warehouse provides protection to goods from loss or damage due to
heat, dust, wind and moisture, etc. It makes special arrangements for
different products according to their nature. It cuts down losses due to
spoilage and wastage during storage.
Warehouses take over the risks incidental to storage of goods. Once goods
are handed over to the warehouse-keeper for storage, the responsibility of
these goods passes on to the warehouse-keeper.

Thus, the risk of loss or damage to goods in storage is borne by the
warehouse keeper. Since it is bound to return the goods in good condition,
the warehouse becomes responsible for any loss, theft or damage, etc.
Thus, it takes all precautions to prevent any mishap.

3) Value-adding activities/Minor Processing

Warehouses also perform the functions of grading and branding of goods
on behalf of the manufacturer, wholesaler or the importer of goods. It also
provides facilities for mixing, blending and packaging of goods for the
convenience of handling and sale.

4) Financing

When goods are stored in any warehouse, the depositor gets a receipt,
which acts as a proof about the deposit of goods. The warehouses can also
issue a document in favor of the owner of the goods, which is called
warehouse-keeper’s warrant.

This warrant is a document of title and can be transferred by simple
endorsement and delivery. So while the goods are in custody of the
warehouse-keeper, the businessmen can obtain loans from banks and
other financial institutions keeping this warrant as security. In some cases,
warehouses also give advances of money to the depositors for a short
period keeping their goods as security.