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30-Oct-15

Define Warehousing..
Warehousing refers to the activities involving storage of goods on

Supply Chain Management


Session 2

a large-scale in a systematic and orderly manner and making them


available conveniently when needed.
In other words, warehousing means holding or preserving goods

in huge quantities from the time of their purchase or production


till their actual use or sale.

Warehousing & Distribution Centres


The place where goods are kept is called warehouse.
The person in-charge of warehouse is called warehouse-keeper.

What is a Warehouse ?
Under the Warehousing(Development and Regulation)

Act, 2007, warehouse has been defined :


- as any premises(including any protected place),
- confirming to all the requirements,
- including manpower specified by the Authority by
regulations,
- wherein the warehouseman takes custody of the
goods deposited by the depositor and
- includes a place of storage of goods under controlled
conditions of temperature and humidity.

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30-Oct-15

Introduction-Warehousing
Holding or preserving goods in huge quantities from time of

their purchase or production till their actual use or sale.


Bridges gap between production and consumption of goods.
Need for storage arises both for raw material as well as

finished products.
Storage in large scale & in specified manner is Warehousing.

Traditional Fortlifts Vs AGVs


Conventional Forklifts

Controlled by Human

Beings

Automated Guided
Vehicles

Some Activities of Warehouse - Transportation


Consolidation.

Controlled by the laser

scanner guidance system

Operated by only during

AGVs can operate 24/7

work hours by taking


break.
Time wastage occurs and
possibility of late
deliveries.

without taking a break


Reduce time wasted

waiting for late deliveries

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30-Oct-15

Some Activities of Warehouse.- Product &


Supply Mixing.

Some Activities of Warehouse


Cross Docking.

Under a cross docking system, palletloads can be moved directly


across the warehouse floor from receiving to shipping (left). Boxes,
however, first must pass through a sortation system (right)

Basic Warehouse Decisions.

Typical warehouse Layout

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30-Oct-15

Warehouse layout:
The warehouse layout needs to fit specific needs. Considerations
to be made while planning the layout and operation are:
Deciding on the receiving and shipping locations
Identify minimum paths for movement of equipment and
people, for speedy storage and retrieval
Classifying items as slow, medium and fast and then allocating
separate area for these
Placing the material handling systems at their assigned location

Inside a warehouse

Determination of warehouse space and


design:
a) A sales forecast or total tonnage expected is used to estimate the
final size of the warehouse required. A number of techniques like
linear programming, simulation etc are used to determine
warehouse size.
b) Warehouse designing is a specialty planning activity usually done
by an architect.
Specifications like size of warehouse, lay out, path of material
handling equipment, are required.
The warehouse must be designed for maximum utilization of
available space and material handling equipments.

Need for Warehousing


(i) Seasonal Production- You know that agricultural

commodities are harvested during certain seasons, but their


consumption or use takes place throughout the year. Therefore,
there is a need for proper storage or warehousing for these
commodities, from where they can be supplied as and when
required.
(ii) Seasonal Demand- There are certain goods, which are

demanded seasonally, like woolen garments in winters or


umbrellas in the rainy season. The production of these goods takes
place throughout the year to meet the seasonal demand. So there
is a need to store these goods in a warehouse to make them
available at the time of need.

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30-Oct-15

Need for Warehousing

Need for Warehousing

(iii) Large-scale Production - In case of manufactured goods,

now-a-days production takes place to meet the existing as well as


future demand of the products. Manufacturers also produce goods
in huge quantity to enjoy the benefits of large-scale production,
which is more economical. So the finished products, which are
produced on a large scale, need to be stored properly till they are
cleared by sales.
(iv) Quick Supply - Both industrial as well as agricultural goods

are produced at some specific places but consumed throughout the


country. Therefore, it is essential to stock these goods near the
place of consumption, so that without making any delay these
goods are made available to the consumers at the time of their
need.

(V) Continuous Production- Continuous production of goods

in factories requires adequate supply of raw materials. So there is a


need to keep sufficient quantity of stock of raw material in the
warehouse to ensure continuous production.
(vi) Price Stabilization- To maintain a reasonable level of the

price of the goods in the market there is a need to keep sufficient


stock in the warehouses. Scarcity in supply of goods may increase
their price in the market. Again, excess production and supply may
also lead to fall in prices of the product by maintaining a balance of
supply of goods, warehousing leads to price stabilization.

Characteristics of Ideal Warehouses:

Characteristics of Ideal Warehouses:

I. Warehouse should be located at a convenient place near highways,

V. Proper arrangement should be there to protect the goods from

railway stations, airports and seaports where goods can be loaded


and unloaded easily.
II. Mechanical appliances should be there to loading and unloading
the goods. This reduces the wastages in handling and also
minimises handling costs.
III. Adequate space should be available inside the building to keep the
goods in proper order.
IV. Ware houses meant for preservation of perishable items like
fruits, vegetables,eggs and butter etc. should have cold storage
facilities.

sunlight, rain, wind, dust, moisture and pests.


VI. Sufficient parking space should be there inside the premises to
facilitate easy and quick loading and unloading of goods.
VII. Round the clock security arrangement should be there to avoid
theft of goods.
VIII. The building should be fitted with latest fire-fighting
equipments to avoid loss of goods due to fire.

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30-Oct-15

Types of Warehouses

Private Warehouses
Private Warehouse
Users : Manufacturers or traders to store, exclusively, their own stock

of goods
Public Warehouse
Facilities :The design and the facilities provided therein are according

to the nature of products to be stored.


Govt. Warehouse

BBonded Warehouse

Co-operative Warehouse

Public Warehouses
Users : To store goods of general public.Users has to pay rent.

Government Warehouses
Users : Both government and private enterprises may use these

warehouses to store their goods


Owners : May be an individual, a partnership firm or a company .
Owners : Owned, managed and controlled by central or state
Example : manufacturers, wholesalers,exporters, importers,

governments or public corporations or local authorities

government agencies, etc.


Example : Central Warehousing Corporation of India, State
Regulated by : To start such warehouses a licence from the

Warehousing Corporation and Food Corporation of India

government is required. The government also regulates the functions


and operations of these warehouses.

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30-Oct-15

Bonded Warehouses

Co-operative Warehouses

Purpose : To store imported goods for which import duty is yet to be

paid.

Owners : Owned, managed and controlled by co-operative

societies.
Owners : Owned, managed and controlled by government as well as

private agencies. Private bonded warehouses have to obtain licence


from the government.

Users : Warehousing facilities at the most economical rates to the

members of their society.

Example : Generally owned by dock authorities and found near the

ports.

Types of Warehouses

Types of Warehouses

Contract Warehouse:

General Merchandise warehouses: Deal in all

Combine features of both public and private warehouses. The

risk is shared and there is a long term relationship that will


result in lower costs.
Benefits include economies of scale, flexibility, information,
and equipment sharing among clients.

commodities except specialized or commodity items. These


can either be public or private.
Refrigerated/Cold Storage warehouses: Used for

storing perishable items, which are kept at low temperatures


to preserve quality.
These are expensive and a variation of this type of warehouse
is known as the controlled temperature warehouse, which is
lesser expensive and is used for storing fruits, milk etc.

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30-Oct-15

Public Vs Pvt Warehouse


Warehousing costs

Centralized versus decentralized warehousing


Centalized Warehousing

Decentralized Warehousing

A single warehouse serves the whole

The market is divided into different

market,

Features

Public Warehouse

Operating Cost

Higher due to inclusion of profit

not closer.

Large facility, equipment,


trained pesonnel

Control

Not satisfactory

Direct responsibility over


personnel and procedures

Risk

Minimal

Economies of
Scale
Storage and
handling cost

Possible due to serving many


customers

Risk of obsolences due to


change in tech.
Dependent on company's
volume

Know exact charges

Generally not estimated

Centralized Warehousing
Strengths

Weakness

Need not carry large inventory.

Transport cost is max.unless in

bulk qty.

zones, each of which is served by a


different (smaller) warehouse.

Lower facility costs because of larger

economies of scale.
Inbound transportation costs lower
Strong band loyalty, limited mkt,

Industial products

Reduced lead times since warehouses

are much closer to customers.


More facility costs and benefit of larger

economies of scale is absent.


Outbound transportation costs lower
FMCG poducts, close to Retail Chain stores

10 to 20% lower if in
sufficient volume

Initial Investment None

No stock out situation due to


More lead time since warehouses are

Pvt Warehouse

storing of goods at one/few


locations.
Demand variations in different

market segments can be met at a


short notice.
Centralized control of inventory.

Distant mkts DD cannot be met in

short notice otherwise, costly


mode of transport will be adapted.
Loss of customer service

advantages.

Poor market coverage and control.

Bulk transportation will be

cheaper.
Less warehousing costs.

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