OBS210
Chapter 8: Warehouse Management
Defining warehouse
Any system for storing items at any point in the logistics chain, from the point of origin
(raw material warehouse) to the point of consumption (work-in-process or production
warehouse) (finished goods warehouse or distribution centre).
Although a DC maintains inventory at the downstream end of the supply chain, the terms
warehouse and distribution centre (DC) are interchangeable.
Warehouses refer to places where raw materials, work-in-process goods and finished
goods are stored.
Role of warehousing
From inbound raw materials warehousing to outbound finished goods warehousing
post-production, and any forward warehousing activities closer to the customer's final
point of consumption - whether performed by network depots or large distribution
centres - warehousing plays an important role in the supply chain.
Type of warehouses
1. Inbound warehouse- goods coming from suppliers are stored before manufacturing
2. Outbound warehouse- goods coming from manufacturing plant en route to customers
Megan Meiring
, 3. A distribution centre- goods coming from various manufacturers are stored and routed
to retailers
Why firms use warehouses and distribution centres
1. To achieve economies of scale
2. To achieve production economies
3. To take advantage of quantity purchasing discounts and forward buys
4. To maintain a source of supply
5. To support firm's customer service policies
6. To meet changing market conditions
7. To help overcome the time and space (distance) gap that exists between producer and
the end consumer
8. To accomplish least total cost logistics
9. To service the needs of a firm more effectively
10. To support the just-in-time programmes of suppliers
11. To keep a steady flow of supply of the product
12. To enable efficient "last mile" logistics
13. To help provide a level of customer satisfaction and service
14. To help close the “time and space” gap
15. To serve as a link between the supplier and the producer
16. To serve as an integral part of every logistics system
Purpose of warehousing
Movement
Receiving activity: physical unloading of products from carrier
Transfer: physical movement of product to storage
Order selection: reorder products according to customer selection(picking)
Shipping: assembles orders into carrier equipment + checking orders to be
shipped
Storage
Temporary basis: storage for basic products
Megan Meiring
, Semi-permanent basis: storage of inventory in excess of that required for
normal replenishment e.g. armaments and ammunition
Buffer and safety stock also used in warehousing for unexpected or independent
demand
Information transfer
Inventory levels
Throughput levels
Stock-keeping levels
Customer data
Product groupings within the warehouse
Compatibility: in terms of similarity e.g. Nike shoes: Men, Woman, Kids
Complementary: how often products are ordered together e.g. Golf clubs, golf shoes, golf
bags etc.
Popularity: dependent on turnover rates or demand rates e.g. Samsung S10, IPhone 11
etc.
Categorisation of inventory within the warehouse
According to the Demand Frequency
- Customers both internal and external, want items from the warehouse at different times
of the year.
- Goods are shelved according to the demand for the product.
According to the Pick Destination
o Goods can be stored and categorised based on going to the same destination.
According to special storage requirements
Hazardous
Class A and B poisonous gases- small leaked amount can kill. Placards needed
for storage
Radioactive materials- placarding needed + sign that says radioactive (law)
Other restricted materials (ORM)- ORM A= general toxic materials; ORM B=
materials with corrosive properties; ORM C= materials must be shipped/moved
with care; ORM D= flammable gasses
Class A, B and C explosives- class B explodes by rapid combustion; class C
categorised as extreme caution
Perishable
Dairy, meat, flowers etc.
Megan Meiring
Chapter 8: Warehouse Management
Defining warehouse
Any system for storing items at any point in the logistics chain, from the point of origin
(raw material warehouse) to the point of consumption (work-in-process or production
warehouse) (finished goods warehouse or distribution centre).
Although a DC maintains inventory at the downstream end of the supply chain, the terms
warehouse and distribution centre (DC) are interchangeable.
Warehouses refer to places where raw materials, work-in-process goods and finished
goods are stored.
Role of warehousing
From inbound raw materials warehousing to outbound finished goods warehousing
post-production, and any forward warehousing activities closer to the customer's final
point of consumption - whether performed by network depots or large distribution
centres - warehousing plays an important role in the supply chain.
Type of warehouses
1. Inbound warehouse- goods coming from suppliers are stored before manufacturing
2. Outbound warehouse- goods coming from manufacturing plant en route to customers
Megan Meiring
, 3. A distribution centre- goods coming from various manufacturers are stored and routed
to retailers
Why firms use warehouses and distribution centres
1. To achieve economies of scale
2. To achieve production economies
3. To take advantage of quantity purchasing discounts and forward buys
4. To maintain a source of supply
5. To support firm's customer service policies
6. To meet changing market conditions
7. To help overcome the time and space (distance) gap that exists between producer and
the end consumer
8. To accomplish least total cost logistics
9. To service the needs of a firm more effectively
10. To support the just-in-time programmes of suppliers
11. To keep a steady flow of supply of the product
12. To enable efficient "last mile" logistics
13. To help provide a level of customer satisfaction and service
14. To help close the “time and space” gap
15. To serve as a link between the supplier and the producer
16. To serve as an integral part of every logistics system
Purpose of warehousing
Movement
Receiving activity: physical unloading of products from carrier
Transfer: physical movement of product to storage
Order selection: reorder products according to customer selection(picking)
Shipping: assembles orders into carrier equipment + checking orders to be
shipped
Storage
Temporary basis: storage for basic products
Megan Meiring
, Semi-permanent basis: storage of inventory in excess of that required for
normal replenishment e.g. armaments and ammunition
Buffer and safety stock also used in warehousing for unexpected or independent
demand
Information transfer
Inventory levels
Throughput levels
Stock-keeping levels
Customer data
Product groupings within the warehouse
Compatibility: in terms of similarity e.g. Nike shoes: Men, Woman, Kids
Complementary: how often products are ordered together e.g. Golf clubs, golf shoes, golf
bags etc.
Popularity: dependent on turnover rates or demand rates e.g. Samsung S10, IPhone 11
etc.
Categorisation of inventory within the warehouse
According to the Demand Frequency
- Customers both internal and external, want items from the warehouse at different times
of the year.
- Goods are shelved according to the demand for the product.
According to the Pick Destination
o Goods can be stored and categorised based on going to the same destination.
According to special storage requirements
Hazardous
Class A and B poisonous gases- small leaked amount can kill. Placards needed
for storage
Radioactive materials- placarding needed + sign that says radioactive (law)
Other restricted materials (ORM)- ORM A= general toxic materials; ORM B=
materials with corrosive properties; ORM C= materials must be shipped/moved
with care; ORM D= flammable gasses
Class A, B and C explosives- class B explodes by rapid combustion; class C
categorised as extreme caution
Perishable
Dairy, meat, flowers etc.
Megan Meiring
