Warehousing Management

Concept of warehousing
Storage
Warehouse
Distribution centre

Types of Warehouse
Basis of ownership- Private and Public warehouses
Basis of Services
Bonded warehouse
Field warehouse
Cold Storage
Distribution warehouse
Buffer storage warehouse
Export and Import warehouse
 Warehousing Management

Factors Public Warehouses Private Warehouses

Operating Costs Higher due to inclusion of profits 10-15% lower

Initial investment Nil Large facility, startup, equipments,

trained personnel
Control Good Direct responsibility over
personnel and procedures
Risk Minimal Risk of obsolescence due to
change in technology or demand
Tax advantages Free-port states Depreciation allowance

Economies of sale Possible to serving many Dependent on company volume

customers
Consolidation of Can do to a warehouse and None
shipments finally to a customer
Storage and Know exact charges for decision- Generally estimated
 Warehousing Management
• Functions of warehousing
• Economic Functions
• Consolidation
• Break Bulk
• Stockpiling
• Value-added Service

• Operational Functions
• Receiving of goods
• Recording of goods showing stock position
• Storing of goods at an appropriate place with proper identification
• Handling of goods
• Order receiving, processing and filing
• Marshalling of goods to various customers
• Despatching
• Preparation of shipping documents
• Ensure Legal functions
 Warehousing Management
• Warehousing Strategy
• Making available goods to customers
• Degree of customer service
• Minimum total distribution costs
• Demand pattern
• Buying behaviour of customers
• Reaction of customers
• Warehousing strategies of competitors
• Financial and other resource constraints
• Brand equity
• Warehousing facilities required
• Centralised or decentralised warehouses
• Location of the warehouses
• Cost of warehousing
 Warehousing Management
Strengths
Sl. Centralised warehouse
no
1 Need not carry large inventory
2 No stock-out situation
3 Demand variations in different
market segments can be met at
short notice
4 Control on inventory is efficient
5 Warehousing costs will be low
Decentralised warehouse
Market coverage will be maximum
Maximization of customer service-
leading to high level of loyalty and
goodwill
Transportation cost will be moderate
due to bulk transport
Better control over market
intermediate
 Warehousing Management

Weakness
Sl. Centralised warehouse Decentralised warehouse
no
1 Transport cost is maximum unless Huge investment on inventory
moved in bulk quantity
2 Distant market demands cannot be Huge warehousing development
met in short notice costs

3 Loss of customer service Transportation cost will be moderate

due to bulk transport

4 Poor market coverage and Shortage of goods at one warehouse

replenished from another may add
additional transport cost
5 Poor control on the market
 Warehousing Management
• Factors for selection of Number and location of warehouse
• Number of production plants and the distance from the markets
• Infrastructure required in the warehouse and the type of transport needed
• Limited products and clustered
• Nature and quality of goods to be stored
• Brand Loyalty
• Financial strength of the company
• Flexibility of modifying the facilities of the warehouse
• Degree of service to customer
 Warehousing Management
• Warehouse Design
• Products in terms of Quantity and character
• Estimation of the future expansion
• Identification and selection of material handling facilities
• Purpose of the facility
• Layout of the facility
• Space required
• Communication requirements
• Rail connectivity
• Safety features