CAd 204 Warehouse Operation Management that require refrigeration you need to ensure that your warehouse

lives up to this standard.

MODULE 1
Central Location when you source a warehouse close to a customer
Warehousing is a requirement for most businesses that manufacture, or manufacturing hub, you can ensure better transit of goods,
import, export or transport goods. decreasing the time it takes to move products between places.
It can actually save you money and boost your productivity. Superior Flow of Goods the better flow of goods from manufacturer
to end consumer is brought about by understanding the best layout of
Gives you better control over your inventory and ensures that
your warehouse and how to store goods optimally to move them fast
customers will receive their products on time, which ultimately leads
fire or theft.
to higher profits.
Warehousing Functions and Types
Main function of warehouse is for storage purposes
Warehouse is a place used for the storage or accumulation of goods.
Importance of Warehousing in a Logistics System
Warehousing can also be defined as assumption of responsibility for
Better Inventory Management
the storage of goods.
Warehouses provide a centralized location for your goods, making
Functions of Warehousing
it easier to track and manage your inventory. By investing in a
warehouse, you'll store, ship and distribute products more efficiently. (1) Storage: basic function of warehousing.
If something is out of stock, you'll know it right away and provide
customers with alternative options rather than leaving them waiting (2) Price Stabilization: warehouses play an important role in the
for days or weeks. process of price stabilization. It is achieved by the creation of time
utility by warehousing.
(To avoid delay or delayed processing/ delayed time delivery)
(3) Risk bearing: warehouses are constructed in such a way as to
More Efficient Packing and Processing minimize these risks. Contract of bailment operates when the goods
are stored in warehouses.
Most warehouses provide the equipment and supplies you need to
store, move, package and process orders from customers. Pallet Bailor person keeping the goods in warehouses
racks, loading docks and packing materials are just a few to mention.
This way, you'll have everything in one place, which will save you Bailee warehouse keeper acts as bailee. Has to take the reasonable
time and money. care of the goods and safeguard them against various risks. For any
loss or damage sustained by goods, warehouse keeper shall be liable
A warehouse enables businesses to pack and grade their goods to the owner of the goods.
according to legal requirements and customer needs. The logistical
cost is reduced, while flexibility is maximized. This type of facility (4) Financing: loans can be raised from the warehouse keeper against
can be an ideal distribution location, eliminating the need to arrange the goods stored by the owner. Goods act as security for the
for pickup and hire employees to manage fulfillment. warehouse keeper. Warehousing acts as a source of finance for the
businessmen for meeting business operations.
Superior Customer Service
(5) Grading and Packing: warehouses provide the facilities of
Delivery speed is one of the first things buyers take into packing, processing and grading of goods. Goods can be packed in
consideration when choosing a shipping carrier. convenient sizes as per the instructions of the owner.
Warehousing allows for timely delivery and optimized distribution, Types of Warehouses
leading to increased labor productivity and greater customer
satisfaction. It also helps reduce errors and damage in the order (a) Private Warehouses: Private warehouses are constructed and
fulfillment process. Plus, it prevents your goods from getting lost or owned by the business enterprises in order to store the products
stolen during handling. produced by them. These are exclusively owned and used by the
producers themselves and are not meant for other manufacturing or
Ensure Price Stabilization business units.
A warehouse allows you to store your products for a later date Therefore, due to large expenses, private companies prefer to
when the demand is high. This helps ensure price stabilization and have assistance of public warehouses and will go for private
reduces revenue losses. warehouses under following situations:
Maintain consistent stock levels and maximize your profits. (i) Wide presence and firm commitment in the region and necessity
to have permanent base in an area.
Improved Risk Management
(ii) Considering long term strategic advantage.
Warehousing not only protects against price fluctuations but also
provides safe storage of perishable products. Depending on your (iii) Scope of optimum utilization is assured for long periods.
needs and type of business, you can lease a warehouse equipped with
refrigerators, freezers and optimal temperature control. (iv) To build advantage over competitors

Helps extend the product’s shelf life and ensures customer (b) Public Warehouses: also known as duty paid warehouses. It is
satisfaction open for public at large.

The products stored in warehouses are typically insured. This means May be owned by an individual or some agency whose main object is
that you have higher chances to receive compensation from your to provide storage facilities to people for certain fees or charges.
insurance company in case of damage These warehouses operate within rules and regulations formed by the
government.
Advantages of Warehousing
Usually situated near railway lines or main roads, so as to provide
Improved Inventory Accuracy knowing how much inventory you quick transportation services
have and how much you have moved means you can plan for the
future more precisely (c) Bonded Warehouses: used for imported goods which are not
granted clearance on account of non-payment of custom duty by the
Reduced Overhead Cost as you improve the running of a warehouse importer of these goods. Such warehouses are situated near the ports.
you can invest more in further development and reduction of costs. Goods can’t be removed from these warehouses until the custom
duties are paid.
Better Staffing Levels understanding how busy your business will
be over a period of time will allow you to plan your staffing needs May be run by the government or private agencies (when granted
accordingly. licenses to operate such warehouses)
Protection of Goods having a storage facility that fits the needs of Other Type of Warehouses
your goods it so important to a business. If you have perishable goods
(A) Special Commodity Warehouses: are constituted for storing a workforce, manufacturers should find out about the skills of the
particular type of commodity, e.g., tobacco, cotton, wheat etc. Nature workforce.
of commodity is important in selecting the type of warehouse. For
storing petrol, storage tanks are needed and for storing agricultural A gap will result in low levels of customer service and reduced
products, go downs are needed competitiveness and productivity. Compare the size of the facility to
the number of employees to determine if it’s a good fit for the kind of
(B) Cold Storage or Refrigerated Warehouses: used for storing service the company requires.
perishable commodities like eggs, butter, fruits, vegetables, fish,
fresh meat etc. Goods stored in cold storages can be held for longer Processes - How many points of entries do the warehouses have, and
time. In fact, cold storages have made possible the regular supply of what is the system to manage the inbound vs. outbound traffic in the
certain commodities throughout the year. Refrigerated warehouses facility? Do these structures have a standard staging procedure? What
have greatly improved the modern way of life. are the standard services, included in the price vs. special assistance
provided for an extra fee? Can these warehouses handle the
(C) Institutional Warehouses: Different institutions and bodies have inspection, storage, dispatch, stocking, reverse logistics, packaging,
their own warehouses on account of the nature of their operations. organization, or reporting duties?
For example, Banks, Railways, Food Corporation of India etc. has
their own warehouses for conducting their activities. Risk - While using an outsourced vendor for warehousing, it can
remove a large part of the risks associated with logistics. The
Banks keep the stock of the parties in these warehouses as security company partners will shoulder most of this burden as they provide
against the loans advanced. assistance to resolve potential issues and work proactively to
decrease the traditional problems associated with moving products
Railways maintain warehouses to store large quantity of goods. with heavy machinery. It is crucial to find out how they handle issues
when the problems arise to practice due diligence in protecting the
Various transport agencies also maintain warehouses for storing the
company from weak vendor choices.
goods which are to be dispatched and received.
Technology - If the product lines are multiple with assorted SKUs,
10 Factors to Consider while Selecting a Warehouse
the company may need to search for warehouses that have integration
Location - Considering the current shipping locations of the with much-advanced robotics or sorting technologies like conveyor
companies suppliers, as well as the delivery locations that are to be belt systems to decrease human error while loading the trucks. As
arranged for customers, is crucial for selecting a warehouse. more advanced technology is integrated for the warehouse
management and logistics sectors, much is up to warehouse managers
Access - Any public warehouse that is looking for contracting or is and logistics firms to stay up-to-date on the latest innovations. The
ready to convert as a major distribution center will need to be easily implementation of adept technologies will be critical to the smooth
accessible from major highway networks. Warehouses should also be operations of warehouses and supply chain processes.
nearer to major port locations with strengths aligned to the product
type that is being stored or manufactured. WMS- Warehouse Management System

While choosing a warehouse, consider the following points in

concern with the transportation of products, be it to or from the
Choosing a Warehouse Location: 7 Critical Criteria to Consider
warehouse.
Choosing the right warehouse location can make all the difference in
 Accessibility to highways and exit ramps
how effective, efficient, and profitable a company is. Leasing or
 Public transportation access purchasing a warehouse is a major decision, and a choosing the right
location can significantly enhance a company's ability to compete and
 Highway interconnectivity effectively serve customers.
 Average traffic speed and volume When it comes to selecting a location, it’s important to take the time
and consider all of the following criteria, take some notes, and then
 Traffic peak hours
compare your notes against all the available options. Only after all
 Proper road signs and signals the data has been compiled and analyzed should the final decision be
made.
 Road safety and conditions
Rent Rate & Taxes - Cost will remain a key criterion when selecting
Client Profile - If 50 customers who only occupy a small amount of the right location of a warehouse, but it must not be the only one.
the warehouse space exist, that is considered a warning sign that the Hidden costs could offset any savings on cheap rental rates and
warehouse doesn’t have the experience to attract larger companies therefore must be considered.
with much more sophisticated requirements to command and
maintain larger square footage utilization. In addition to rates, attention must also be given to local
governmental regulations, tax structure and tax incentives. You could
Storage Area - If the company has strict storage and firefighting also benefit from special local government programs intended to
requirements for materials that are hazardous or flammable, or even promote your industry segment, so it pays to consider this as well.
in case of food items, it needs to make sure that the location chosen
for the warehouse properly suits and handles the company’s needs. A Workforce Availability, Labor Skills, & Costs are directly
great deal of unwanted disaster is avoided by being proactive and associated with local demographics. Not every geographical location
checking the storage requirements of the warehouse location. offers a workforce with the right skills at the right price. Pay attention
to the local demographics of the state/city being considered.
Association Memberships - Are there any active members of well-
known associations who can lend extra credibility options to the When evaluating workforce availability, consider supply and
warehousing operations? If the companies demonstrate their demand: Low workforce availability and high demand will drive
commitment to being a member of the IWLA (International salaries up (meaning operating cost will be higher). The opposite is
Warehouse Logistics Association), for example, it shows that they also true. High levels of workforce availability and low demand will
are interested in presenting themselves among similar flocks for drive salaries down.
learning, gaining resources for improvement, and demonstrating
Besides workforce availability and costs, skills are also critical. A
enriched value over time.
workforce skill gap will result in a low quality of customer service
Experience - Check established date of the existing warehouse to and a reduction in both competitiveness and productivity.
ensure a good balance of age, displaying their weathered qualities
Roads, Highways & Traffic Flow - Accessibility to roads and
and the test of time, combined with the newness of the facility with
highways as well a local traffic density must also be considered,
modern technology and additions to make things flow efficiently.
especially if trucking is the main mode of transportation.
Aged setups can mean antiquated processes, but too new can mean
that kinks need to be still worked out, so to speak. Transportation costs are affected by some or all of these variables and
can impact the competitiveness of the company or the attractiveness
Employees - Another essential aspect to consider while making
of the warehousing facility to customers. Consider the following
decisions about warehouse location is to find out if they have a
points:
reliable and experienced workforce. It should also consider the local
demographics of the area. Aside from the cost and availability of the  Accessibility to highways & exit ramps
 Highway inter-connectivity

 Public transportation penetration

 Average traffic speed

 Average traffic volume

 Traffic peak hours

 Road safety & conditions

 Proper roads signs & signals

Factors such as congested highways and surface roads as well as poor

signaling systems will increase fuel consumption, accident rates, and
time wasted.

Proximity to Airport, Railway Stations & Ports - In this case, the

main mode(s) of transportation used to receive or ship goods to and
from the warehouse must be prioritized. For example, if most of the
cargo is imported/exported via air, then you will want to be as close
as possible to the airport. If this is not possible, you should at least
explore facilities with easy access to highways and roads that offer a
direct connection to the airport.

You want to be as close as possible to the point of the most

predominant transportation mode in order to control drayage costs
and have the highest possible velocity level – the maximum number
of containers per month.

Markets & Local Environment Factors - Proximity to suppliers,

producers and the market(s) being served as well as local
environmental factors must be also considered.

Any new warehouse should be as close as possible to major suppliers,

producers, and/or customers. This will help reduce lead times,
decrease transportation costs, and enhance responsiveness.

The factor to consider here is who is/are the major supply chain
partner(s) and how you can make the supply chain more efficient by
strategically selecting the warehouse location.

Also, local environmental factors such as weather conditions and risk

of exposure to natural disasters should also be considered.

Other local environmental factors that should also be considered

include, proximity to neighbors (warehouses can be noisy – avoid
disputes), traffic congestion, and peak traffic hours.

Building Availability & Utility Costs - If the business grows or

shrinks, you will need to adjust accordingly. If this is the case, you
will want to minimize your need to re-evaluate all these factors if
moving to a new warehouse is your only option. By moving within
the same area, you will be able to retain your workforce, utilities,
etc., and minimize the frustrations of carriers/truckers and customers
trying to find the new location.

One last aspect: utilities. You will want to double check the
availability and cost of utilities. Some warehouses are more
demanding/dependent on one utility than another.

Take the time to properly plan and understand the most strategic
warehouse location for you and your customers. The impact of this
decision is much more significant than just opening a warehouse
somewhere. The location of your warehouse will have long-lasting
effects on the financial, operational, and competitiveness aspects of
the company.