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Warehouse Essentials

Logistics & SCM

Manufacturing systems


in the 90s differs significantly in its role, from warehousing today. Earlier
warehouses were seen as fixed cost centers that served mainly as large stock-keeping houses.
Warehousing today has become an important activity in the supply chain and is looked upon as a
crucial element to outperform competitors on lead times, costs & quality. Warehouses are (re-)
planned and automated for high speed, high throughput rate, and high productivity, to reduce
order-processing costs. Today they have matured as more of flow through warehouses, where hold
time has decreased considerably. To achieve higher performance & efficient warehousing
operations there is need for accurate & timely information about parts, resources & functions,
including forecasts. In this paper, while elucidating the changing roles of and shifting
technological trends in warehousing, I would also delve briefly into inventory control & design
aspects of a warehouse and implications for ERP & Warehouse Management Systems.

Warehousing Essentials
Inventory control, production control and warehouse management are the underlying
methodologies that affect the success of industrial distribution organizations. Warehousing in totality
can be defined as the actual process of loading, storage & retrieval with the underlying methodologies.
However, the larger definition also includes concepts such as

Automation or mechanization of operations,

Storage solutions,
Optimization & organization of operations,
Safety & security of the goods stored,
Data of stored materials for tracking.

To provide goods to customer in an acceptable time economically has to be done by distribution

effectively. Basically, warehousing methodology is information-oriented and requires the use of efficient
media to store and handle data about the movement of goods. It is important to have good control over the
Warehousing management should ensure that, for each part:
- Goods storage, retrieval & loaded efficiently & does not add to the lead-time.
- The capacity is sufficient to handle seasonal & forecasted loads
- Parts & finished goods are stored appropriate to their delicacy & value.
- Optimum inventory is available
- Safety of goods & security of information.
Warehousing's original functions location, labor, and knowledge haven't changed much in the last
years. However, today as the supply logistics chain become demanding, warehouses are subjected to variety
of additional but important tasks ranging from quality checks to light production.
Thus in perspective of the strategically defined role of warehousing, selection of appropriate storage systems;
design or relayout of flow movements, the incorporation of necessary technological advances & inventory
control become critical during the initial planning process.

Storage categories
The storage system (termed as shelving & racking) may be of various types depending on nature of
goods, parts, storage periods, space availability, FIFO, LIFO etc.
Commonly known (standard & customized) systems are outlined below
The most flexible racking is the standard racking,
racking requiring no need for special MHE (material handling
For heavy duty & greater dense storage Narrow gangway systems are very efficient..
DriveDrive-In is ideal for predictable stock movement, since it works on FILO basis only.
For shorter room spaces Push back is a worthy system where pallets are accessible in layers rather in full
length as in Drive In racking. This system too falls in FILO category.
The FIFO system is called PalletPallet -based racking which works as Push back racking using gravity fed
The system using double deep lift truck is termed double deep pallet that is storing one pallet behind the
other. The inside pallet is placed first by the special carrier.
In Mobile racking the racks are mounted on mobile stands that travel on tracks laid into the floor.
Similarly Standard shelving becomes the basic solution offering quick and simple assembly, with ease of
Small Part Shelving provides safe, easy storage for smaller parts, electrical components and other tools.
Carton Shelving is ideal for predictable stock movement, as this works on a first in / first out (FIFO)
For manual loading bulk storage one should go for Long span shelving as this provides an inexpensive
solution while being flexible enough to accommodate a variety of products.
One can halve the amount of space required for your shelving needs, still allowing access to all your stock
through Mobile shelving.
HighHigh-Rise Shelving is an excellent way to maximize your warehouse height to the maximum extent and is
easily installed.

In case you want to divide your floor height into multiple units, a mezzanine floor can be used. The space
may be used for any purpose like a new storage unit system or an office on top. For long loads or parts like
pipes, rods, angles etc. Cantilever racking is used.
For protective type of racking & shelving one could consider options such as;
Carpet/Protective racking which is addition of carpets & linens or other supporting materials to safely
store delicate &/or valuable items
For a protective, easy to clean & healthy shelving system Chrome shelving is the ideal solution.

Warehouse management is not inventory

invento ry control
Warehouse management systems and inventory control systems should not be confused as similar. Inventory
control is concerned with the control of stocks throughout the whole supply chain. Inventory monitoring and
measurement takes place at each point in the supply chain.
Warehousing Management is basically concerned about the physical control of goods.
However, a fundamental principle of materials management is that material flow and information flow
must go hand in hand. A warehouse executive should know the status of all his stock in regards to location,
quantity & flow. The monitoring and measurement of stock has to take account of both physical location
and time. The loss of information on one of these, results in degradation in the other.
There are a number of ways in which we can have the stock information. Broadly they can be classified as
Fixed information about stock which dont change often. These include:
Item code;
Batch number or any similar (if appropriate);
Storage/handling type (e.g. pallet, tote, carton);
Minimum pick quantity;
Picking order (e.g. FIFO);
Preferred store area;
Secondary store area;
Variable information about goods. This describes those aspects, which will be varying. Identity of each
unit in load;
Location of each unit load:
Quantity of SKUs in each location;
Movement of each picked item:
Load status (e.g. available, quarantine, QC hold);
Observed / Derived information. This is information that can be determined by analysis of the fixed and
variable information. It might include:
Movement rate per SKU.
Stock discrepancies;
Space usage in the store;
Worker productivity;

Designing Warehouse
An important aspect of designing or re-designing a warehouse is its layout. The design should cover several
aspects besides the assignment of items to storage locations. Thus it should also be concerned with the
arrangement of the functional areas of the warehouse, determining the number of aisles, their proposed
dimensions, and orientation, estimating storage space requirements, designing the flow pattern, and
forming picking zones, designing racking & palleting systems (Fig1)
Designing the layout of a warehouse is thus a complex task involving consideration of various operations.
Outlined here are ordered points one should consider as important design parameters:

Specifying the type & purpose of warehouse.

Forecasting & analysis of expected demand.
Establishing working policies.
Determining inventory levels.
Class/Batch formation.
Departmentalization & the general layout.
Storage partition.
Design of MHS, storage & sorting systems.
Design of aisles/pathways.
Determining space requirements.
Determining the number & location of I/O points.
Arrangement of storage (racking).





Fig 1: An example of warehouse design as a flow

Efficiency improvement through ERP systems

For modern firms in order to have more efficiency for internal functions, the traceability factor needs to be
considerably improved. This inturn means improvement of efficiency for the whole system. Hence there is a
huge focus of traceability in warehouses too. The key to traceability enhancement is by integration of
functions through a common platform for data storing & management. Here is where ERP comes into
centre stage. Advantages of ERP systems are increased warehouse fill rates, improved floor utilization,
reduced mean order shipping times, easy accountability of goods, etc. Also integrating automated
information systems with ERP can minimize the manual errors.

Although ERP systems are sophisticated to handle huge data accurately, they have to be integrated with the
warehouse system through proper optimization & redesign techniques. There has to be an adoption of
suitable policies for item/goods storage & retrieval. A basic ERP implementation can be seen only as a
primary footing towards efficiency improvement .The solution of traceability & warehouse management is
incomplete with only ERP implementation. Operational integration with possible applicable culture
changes is key to the success.

Warehouse Management System

Reduction in cost & perfect solution is the product everyone looks while implementing a system. Many
warehouse executives have gone in for in-house developed WMS systems. They have typically feature by
feature implementation that is done as per specific needs & features. The cost advantage, simpler system
that is easily adaptable & customized are the main advantages of these systems. One should keep in mind
these basic metrics while investing in a WMS.

Metrics for WMS feasibility analysis

A proper analysis is required to generate or ask for the perfect solution.
1. Usefulness: How much the measurement helps for improving scope to serve customers, value
addition, or assets deployment.
2. Validity: to what extent the captured information presents the actual picture of your process.
3. Cost-Savings: Would it help decrease operational costs?
4. Completeness: Does it measure temporary or seasonal effects and represent as variable parameters.
5. Coverage: Does the activity or process covered represent all the parameters to analyze the real
The following list will give some advanced guidance of what to look for:
Job verification: To be able to confirm completion of activity.
Control of picking: To schedule picking & also follow the system of FIFO/LIFO.
Automatic replenishment: In idle periods or under loaded times the system should instruct for
replenishments considering future forecasts to even out loads.
Performance monitoring: ability to calculate the motion rates, picking times, etc. & compare them with
historic data to present the trend.
Job sequencing: to provide with work orders for further operations after sequencing to optimize movements
Reporting: ability to provide comprehensive user-defined reports.
Supervisory functions: Fix problems, quality checks hold, area flushing, perpetual inventory counting.
Location control: (sometimes managed by the inventory control system) location control allows the system
to improve the use of the warehouse space.

Technology Trends
Tracking & locating difficulty in a warehouse with large no of small SKUs can be very complicated even
though you might be well organized. For this reason management executives have tried to implement the
latest technologies to simplify systems & reducing manual errors. Wireless systems are more adopted now.
Wireless systems use RF (Radio Frequency) technology. It provides paperless communication between
warehouse operations and a main computer.

The main areas where it is used are receiving stations, lifts, carriers, containers & in hand held operations.
The basic data is used to transmit are part/ batch numbers, production delivery dates, production or sales
order numbers. The system helps to track online shipment status, verify container composition, & check
real-time inventory status at warehouse.
The crucial operational element in RF is a RFID tag i.e. Radio Frequency IDentification tag containing
an Integrated circuit & a reader that emits radio signals. The reader captures the stored data in the tag
when it passes by. This information is relayed to the terminal computer. The technology is advanced to bar
code reader in the sense it features non-contact reading thus can avoid or cut through grease, dust & burrs
providing foolproof accuracy. It also reduces scanning time as each item is scanned as it passes through
reader on a conveyer avoiding manual scanning.
Further upgradation to this technology would be RFDC (Radio Frequency Data Collection) & RTLS (Real
Time Locating Systems). RFDC technology is the next step in wireless data communication between
computers inside warehouses. RLTS allows a labeled item to be tracked through the supply chain thus
aiding in inventory management real-time. It can even be extended to container, yards, or for tracking the
status of your job order given to a vendor. The application of RFID technology can be broadened to many
aspects & trends of reducing costs of this technology will definitely open new areas for warehouse

One of the great concerns while using wireless systems can be security of information on
air. The solution is of course achieved by the sensitivity of data being transmitted along
the wireless & the appropriate amount spent for securing the same.

Warehousing has always been an important aspect of manufacturing systems & logistics supply chain.
Improvements in operational efficiency & cost reduction is target for achievement through implementation
of appropriate techniques & technology. It is advisable to carry out a detailed facility assessment before
investing in technologies or resources. The integration of newer systems to existing systems has been a grey
area for many. Also integration of warehouse with the companys strategic vision with respect to cost control
& market reaction time will hold key.
Jinesh A Chheda
Author is an Associate Consultant with Process Consulting practice of Frost & Sullivan India Ltd. (A Global Growth Consulting
Company). He can be contacted at or 91-22-28324705 (ext: 146)