COURSE TITLE : WAREHOUSE MANAGEMENT

COURSE CODE : SC3 UNITS : 3

PROFESSOR : MARY ANN AYDE, Ed.D., MBA

PRELIM – OVERVIEW OF WAREHOUSE MANAGEMENT

1. Warehousing Defined
2. Warehousing Management System (WMS) overview
3. Typical warehouse Workflow
4. Nature of warehouse
5. Importance and reasons on holding stocks
6. Types of warehouse
7. Process of Warehousing
8. Warehouse Operations
9. Warehouse location
10. Warehouse activities
11. Functions of warehouse
12. Roles and responsibilities of warehouse manager
13. Benefits of warehousing – Economic & Operational

Warehousing is a set of activities that are involved in receiving and storing goods and preparing them
for reshipment. It is deemed that warehousing not only serve as a storage facility but as hub for various
activities. Thus, warehouse acts as an integral part of logistics that stores products between the point of
origin and the point of consumption.

Warehouse Management
System (WMS). Concepts of
Modern Warehousing that is
basically a database of stock-
keeping units and locator system
which is a software that is used
to track and manage
warehousing activities.
 Receiving and shipping
– WMS is able to record
the inflow and outflow
of inventory, helps
recording the final
transactions, generate
bills for payment for
suppliers and send
invoices to consignees.
 Stock locator system – WMS also tracks locations of all individual products stored in a
warehouse, helps manage and track empty locations in the warehouse to ensure efficient
utilization of both space and labor hours.

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Warehouse management provides a
path to product-based organizations to
manage their warehouse in a desirable
or satisfactory way which enables
them to lower or decrease wastage in
terms of space, labor hours and
assures efficient inventory utilizations. Also, a warehouse is an integral part of supply chain
management which holds goods before they are shipped and delivered to customers. Thus,
warehousing bridge the gap by storing the goods between the 2 processes and further creates time
utility.

Importance & Reasons for holding stock

1. Storage of materials and spare parts

2. Enable grading, picking and branding goods
3. Improve the quality of products as they
mature
4. Uncertain and erratic demand patterns
5. Trade-off between transport and shipping
costs on larger shipments
6. Discounts via bulk buying
7. Distance between manufacturer and the end
consumer
8. Cover for production shutdowns
9. Ability to increase production runs
10. To manage seasonal
11. To manage seasonal demand
12. Preservation of perishable commodities
13. Reduce the risks of theft and damage products
14. Work-in-progress storage
15. Investment stocks
16. Document storage
17. Large scale production
18. Quick supply
19. Continuous production
20. Price stabilization

Types of Warehouses

1. Private warehouses – owned by manufacturers, producers or traders to store exclusively their

stocks which is maintained by individual near their manufacturing units according to their
convenience, design, facility and nature of products to be stored.
2. Public warehouses – provide storage facilities to general public on a rental basis which are
owned by individual, partnership firm or an organization

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 3. Contract warehouses – provide receiving, storage, and shipping facilities to their clients as per
the warehousing contract that depends on the number of transactions and the quantity stored
which is long-term in nature (allows normal business expansion in cost-efficient manner)
Other types of Warehouses

1. Bonded warehouses – storage facilities of imported goods in a secure area before the customs
or import duty is paid by the importer and owned or license by the government.
2. Cooperative warehouses – owned, managed and handled by cooperative societies and cater to
storage facilities at low rates
3. Raw material and component warehouses – storage maintenance of adequate inventory level of
raw materials
4. Work-in progress warehouses – storage facilities for semi-finished products
5. Finished goods warehouse – storage facilities for finished goods before selling or distribution
6. Distribution warehouses – storage facilities for items for distribution that are usually maintained
by manufacturing organizations to store items before delivering
7. Fulfilment warehouses – storage for the process of receiving, packaging and shipping orders for
goods
8. Local warehouses – commonly used by organizations that work on the sales point system of
franchise system and follow up the operations on the basis of customer requirements
9. Value-added service warehouses – (assembly, knitting and packaging)

Process of warehousing

Receiving involves control over the

delivery and arrival to the warehouse of
large quantity of the desired product
and performed by machines and
equipment. This process can in turn be
broken into smaller ones:
 placing a purchase order,
 preparing space in the warehouse,
 unloading (manual or automated),
 verification,
 filling in the database, etc.

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Putting away is delivering goods to the optimal place in the warehouse, correct identification of each
SKU (stock keeping unit) and properly examined.
Storage. Storing goods and bridging the gap between the production and consumption of goods. The
product remains inside the warehouse before going for order picking.
Order Picking is also called order preparation, the process of taking and collecting goods from the
storage place according to the customer’s order. It is thought of as the costliest, most time-consuming,
and most error-prone.
Packing and Shipping. Packing is putting the ordered items together, checking their quality, and getting
the product ready for shipment. Shipping or dispatching is sending goods to the customer and making
sure they are delivered safely and on time.
Returns Managing returns and refunds is a hassle and requires special attention. Returned units have to
be properly identified, sorted, and dealt with, whether it is by putting them back on the shelf, sent to
repair, discarded, returned to the manufacturer, etc.

Warehousing Operations (Types of operations performed by warehouses)

1. Protection of goods – warehouse protect goods from theft, loss or damage from unfavorable
climate conditions which may lead to huge losses to the organization
2.
3. Risk bearing – once the goods are transferred to the warehouse, the risk are also transferred to
the warehouse keeper
4. Financing – the owner or depositor of goods gets a receipt or a warrant immediately after he
deposit the goods.
5. Processing – certain commodities are not healthy to consume in the form they are produced
and processing is required to make them consumable.
6. Stock rotation – the oldest units are arranged in inventory before the new one
7. Cycling counting – small sample of inventory is counted inside the warehouse at any particular
place and this represent the count of all items

The location of the warehouse is directly related

to market coverage and the effectiveness and
efficiency of the distribution system.

Historically, a warehouse can be viewed as a large

box used to store surplus inventory for a long
period of time. But nowadays, warehouse
facilities become distribution hubs that add value
by not storing goods but also processing them
which focuses on productivity and operational
efficiency. If there is a proper planning,
architectural design, construction and operational,
there would be a n efficient interrelationship
between customer service and cost.

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Factors to considered in choosing warehouse location

1. Layout and flow of building – desired

or optimal layout of any warehouse
depends according to operations the
organization will conduct and the type
of equipment to be used
2. Availability of skilled workforce –
locating a warehouse in a remote area
would be cost-effective but finding a
skilled labor and workforce will be
difficult and it will hamper
organization’s needs.
3. Intensity of use – the location of a warehouse also gets affected by the frequency or intensity of
operations inside the warehouse.
4. Proximity to major linkage – easy access of transportation depending on the preference of the
organization
5. Material handling capacity – availability of handling equipment, storage facility and staging
facility
6. Size – warehouse capacity to accommodate the inventory
7. Regulations – considerations of the regulations and policies in the concerned location

1. Choose a certain organization or a business (manufacturer or producer).

2. What type of warehouse you would choose and why? Explain in 5 sentences
3. Have you considered all the factors in choosing the warehouse location? Yes or no?
Explain your answer in 3 sentences.
4. What factors have you considered in choosing your warehouse location? Explain each
factors why did you consider it in 2 sentences.

A warehouse is a place use to store inventory.

Most tasks that occur in a warehouse are related to
inventory management. These tasks include
collecting of receipt of products, issuing of
products, recording changes, and tracking
movement of the inventory. At times, the roles of
warehouse include processing of inventory from
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entry to exit and it is limited in providing storage facility for products in transit from the point of
origin to the point of destination.

Warehouse Activities

1. Receiving (receipt of incoming products, ensuring the quality and quantity received as ordered
and disbursing the products to storage)
2. Pre-packing (happens when products are received in bulk and have to be repack for the retails)
3. Transporting to the appropriate storing place (referred also to put-away which includes material
handling, location identification and placement)
4. Storage (methods of storage depends on the size, quantity and handling characteristics of the
products)
5. Order picking (picking up of the product from the storage place to meet the demand)
6. Packaging or pricing (activities normally left till the last moment to avoid repricing as the
inventory sits in the storage)
7. Sorting (shipment of product as per packaging and destination)
8. Consolidation and shipping (checking orders for completeness and preparing shipping
documents like bills of lading, weighing shipments, loading trucks)
9. Claim settlement (transit damage and material rejection claim settlement to control shrinkage)

Functions of warehouse

1. Systematic and orderly storing of

goods (storage of products from the
stage of production to
consumption)
2. Provide protection (protecting from
heat, wind, rain and spoilage)
3. Risk bearing (responsibility from
theft, shrinkage, damage)
4. Financing (receiving receipt as
warrant when storing products can
be used as collateral)
5. Processing (products that requires
processing before it can be
consumable like fruits and wine)
6. Transportation (provided by some warehouses to certain depositors to collect the product from
the point of origin and delivers it to the desired location on behalf of the depositor)
7. Provide regular flow (commodities like rice and wheat which are produced in particular season
but consumed throughout the year)
8. Easy handling (mechanical equipment in modern warehousing enables easy handling of
products including loading and unloading)
9. Job creation (provides employment opportunities for skilled and unskilled workers in semi-urban
areas)

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Roles and Responsibilities of warehouse manager

Warehouse managers must have a sound knowledge of distribution, logistics and transportation
management to perform various functions of warehousing.

1. Organizing and managing the receipt (methodical receipt, storage, inventory management)
2. Storage of items (proper inventory management process, principles and policies are followed;
forecasting of required materials to ensure uninterrupted flow of materials without
overstocking; suggesting reduction of inventories to comply with the overall objectives of the
management; reviewing purchase of documents to ensure proper allocation of products to
appropriate location; ensuring sufficient stocks of stationery, foods and other items of general
use; ensure security of the warehouse; justify the replacement of worn-out equipment; follow
product safety norms)
3. Dispatching of items (shrink and claim settlements)
4. Employee management (administering and guiding of warehouse employees to facilitate timely
and satisfactory completion of warehouse task while utilizing various resources like warehouse
equipment as per organizational policies; facilitate professional development of employees like
employees’ assessment, trainings, audit techniques; supervise the subordinate workforce to
ensure performance of duties while utilizing duly reports and effective communication; proper
housekeeping by appropriate persons)
5. Provide management with updated reports on current stocks

Additional roles of managers as by influenced by e-commerce, globalization, just-in-time techniques and

collaborations along the supply chain

1. To handle a smaller and a greater number of transactions

2. To track and store more products
3. To provide more customized services
4. To offer more value-added services
5. To process more orders
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 1. Choose a business or organization of your choice that have a possible storage of their products
2. As a warehouse manager, what would be the various function would you provide that saves time
and efficiency. On each functions you will identify, explain it in 3 sentences.

Benefits of warehousing

1. Economic benefits – reduction of

overall logistics and supply chain costs.

a. Consolidation and break bulk –

reducing transportation costs by
using warehouse competence to
group shipment

Consolidation – receiving materials

from various sources then putting
the materials on the warehouse
then ship to desired destination
which helps in achieving the lowest
possible freight rate, timely and controlled delivery and reduced congestion at the
customer’s end.

Break-bulk – receiving single large shipment

and arranging deliveries for multiple
customers which helps in achieving
economies of scale by transporting a larger
consolidated shipment

b. Cross-docking – involves
multiple manufacturers where
inventories comes from various
origins which is combined and
ship to pre-specified assortment
which lessen the handling cost
as the product is not stored at
the cross dock facility. (usually in
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 retail sector to replenish fast moving store inventories, requires exact on time deliveries
from the manufacturer where products are sorted by destination, moved to the warehouse
to the delivery destination)

c. Processing – involves extending (or postponing) production by undertaking processing and

light manufacturing tasks which help to minimize the risk as final packaging is not completed
until final order is received and reducing the level of inventory as the final labelling and
packaging configuration is transferred to the warehouse that helps reduce the total system
costs.
d. Stockpiling – to fulfil the market demand by provident stock buffer (example: rice as
seasonal product but consumed thru out the year)

2. Operational or service benefits – smooth functioning of supply chain improves time and place
capability

a. Stock spotting – selected products were spot stocked in a warehouse to fulfil the customer
order during an important marketing period that is done in committing inventories in
advance with manufacturer’s limited products or seasoned products.
b. Assortment – products were stocked according to the orders anticipated by the customers
which represent assortment of multiple products from multiple manufacturers which
improve service and reduce transportation costs by eliminating numbers of suppliers and
allowing large shipment quantities.
c. Mixing – similar to break-bulk except
to different several manufacturers
were involved which reduce
transportation costs on large quantity
shipments if products were shipped
directly from manufacturing plants to
warehouse and end to customers
(this is useful when the factory is
geographically separated by large
distances)

d. Production support – provide regular supply of components required in the production or

assembly process in timely and economical manner thru safety stocks that are due to lead
times or variations of usage.
e. Market presence – this were the local warehouses that can be more responsive to
customer’s requirement and offer delivery speed compared to distant warehouses which
enhance market share and increase profitability.

CASE STUDY 1

Tian & Company deals with garment business with own manufacturing and distribution system across
Luzon. The company wanted to expand its operation in Mindanao and was mulling at the options of
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establishing a warehouse and manufacturing unit there. This thought of expanding business in
Mindanao was because of the easy availability of land and it was a lucrative option as compared to
Visayas.

The owner of Tian & Co. was searching for a place to set up its manufacturing unit and warehouse in
Mindanao. Various factors had been taken into the account before its set up and facilitate a seamless
flow of operation such as availability of raw materials near the warehouse, skilled labors and sufficient
workforce. There was a proximity of transport facility to make the products reach the desired location
within time. After considering these factors, the owner of the company acquired land in Zamboanga
and set up manufacturing unit and two warehouse, to store the raw materials on warehouse 1 and store
finished good on warehouse 2. Since the company launched the e-commerce website where customers
can buy online, the company implemented the Warehouse Management System (MMS).

Questions:

1. What are the factors that the company considered when they put up the warehouse?
2. Why do you think that they have to consider this factors in choosing their warehouse location?
Justify your answers on each factors that you mentioned in 3 sentences.
3. What could be some other factors that you will consider in establishing the company’s warehouses
in Mindanao aside of what had the company considered in the problem? Name at least 2 and
explain it briefly in 3 sentences.
4. Do you think that their WMS will be effective? If yes, explain briefly in 2 sentences by illustrating
the diagram on the concept of WMS provided in the ppt. If no, justify your answers of non-
effectivity of the said concept by illustrating the diagram on the concept of WMS provided in the
ppt.
5. Enumerate the possible warehouse activities of Tian & Co and elaborately explain why do you think
so in 3 sentences only.
6. What could be the economic benefits of Tian & Co.? Give at least one (1) and justify your answer in
3 sentences
7. What could be the operational and service benefits of Tian & Co.? Give at least one (1) and justify
your answers in 3 sentences
8. As the warehouse manager of Tian & Co., what would be your responsibilities? Explain each
responsibility that you would think of in 2 sentences only.

COURSE TITLE : WAREHOUSE MANAGEMENT

COURSE CODE : SC3 UNITS : 3
PROFESSOR : MARY ANN AYDE, Ed.D., MBA

MIDTERM – WAREHOUSE LOCATION & DESIGN

1. Site Analysis
2. Budget Costs to Consider
3. Product Mix Consideration

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The process of building a warehouse building can be
divided into 2 aspects namely location and design. An
efficient warehouse location and its design are the bases
of an effective supply chain. A warehouse should be
located such a place and should be designed in such a
way that it can serve the expectations of customers
efficiently and in time, if not, it may affect the operations
and the entire supply chain.

The selection of warehouse site is a difficult process in

which various intangible and tangible aspects are
required to be taken of.

Start the selection process by realizing that a facility’s location performs one main functioning
getting a company close to its customers. The key performance issue for a warehouse is lead time
because customers are an impatient society.

 To maintain a seamless flow of goods, a warehouse should be at a place where good transit
time is minimum.

What to Consider in Choosing a Warehouse

1. Efficient transportation or transit – customer service level (distance on delivery)

2. Low-cost network
3. High service network
4. To build a superior network than competitor’s network

 Most of the network designers ignore the aspect of competitors. Good designers who
consider warehouse and service locations of competitors end up with better sales and
service levels.

Analyzing the Warehouse site

1. Do customers require shorter lead times or high availability levels or both?

2. Is it necessary to locate the warehouse near customers?
3. Will it result in any loss if a competitor delivers better service?
4. If the services are improved, will the improvement result in an increase in sales?

Ignoring the role of customer service can cause an organization to spend more and relocate its
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warehouse often, network designers need to consider the budget cost.

Budget Costs to Consider

1. Labor costs
2. Facility cost – costs that are dependent on whether the inventory is placed on a single
warehouse or distributed to many warehouses.
3. Inventory costs – inventory costs increase with an increase in the distribution network
(organization with large distribution networks require additional inventory in their
warehouses to handle out-of-stock inventory conditions
4. Inbound and outbound transportation costs – these costs decrease with an increase in the
network as the more the number of warehouses (the higher the role of inbound shipping the
more effective than outbound shipping)

 Consider also the interdependency of the cost like labor cost is low but transportation is
higher.

Product Mix Consideration

Product Mix implies mixing products from various

production or supplier warehouses for a single
customer.

The operation and design of a warehouse depend on

the product mix, therefore every product must be
analyzed in terms of demand, packaging, annual
sales and others that can determine the design and
layout of the warehouse, warehouse space,
operating controls and procedures and materials
handling equipment.

 The main advantage of product mixing is to reconfigure the transportation flow from the origin
location to point of destination which generally affect the transportation cost. Mixing
warehouses reduce the overall storage in a logistic system while optimizing transportation costs
and getting the various assortment needed by the customers. (product line such as design,
color and sizes are being considered – shoe manufacturing – where production may be in
different locations for specializing the product line, and products produced will be transported
to mix warehouse to fulfill the orders.

Warehouse Design

With the evolution of storage installation growing over time,

many organizations have realized the role of warehouses in
gaining an edge over competitors which supported the facilities
of organizations of all types and focus on offering multitude
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services.

Therefore, to fulfill the evolving role of organizations, warehouse need to be rightly designed to
complied the required information, adapt the future needs and fulfill the desired functions that
should give emphasis on the key aspects of warehouse design such as design criteria, material
handling and storage plan.

Four factors to consider in designing a warehouse

1. Flow – logical sequence of warehouse operations in

which all activities are placed close to each other,
materials in system and handling medium and
equipment. (smooth operations, uninterrupted and
managed movement of traffic, people and materials)
2. Accessibility – getting the right level of pack when it
comes to fast-moving stock-holding and pick-up base
areas which should be done with no or minimum compromise to the use of space (ex:
bottled water which is fast moving and have a long shelf life, the warehouse should apply
the first in-first out of case leveling)
3. Space – the building can be economical and with simplest design that allows operation
flexibility and changing operations for meeting future needs, should be possible without any
disruptive and expensive changes to the building itself. (should consider accessibility and
flow simultaneously)
4. Throughput – to consider product categories, its nature and velocity through the flow
through a warehouse which should be accurate in data to lessen the risk failure.
 Product nature – dimensions and handling characteristics that affects the way the
product moved through a flow (ex: bulk, hazard, security requirements, fragility and
compatibility with other products)
 Product velocity takes care of volumes moving through the warehouse daily

FLOW

ACCESSIBILITY
WAREHOUSE
DESIGN FACTORS SPACE
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 THROUGHPUT

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