Objectives: Identify the various functions and responsibilities of the warehouse/stores function. Identify the various costs associated with holding or not holding inventory. Describe and contribute in the design of an effective warehouse Explain how to measure the performance of a warehouse

1. Warehousing &
Inventory Management

2. 2
House Rules

3. 3
Methods of Learning

4. 4
Workshop Objectives
• Identify the various
functions and
responsibilities of the
warehouse/stores function.
• Identify the various costs
associated with holding or
not holding inventory.
• Describe and contribute in
the design of an effective
warehouse
• Explain how to measure the
performance of a
warehouse

5. 5
Workshop Content
• Functions and
Responsibilities of
stores/warehouse
• Reasons for holding stock
• Cost of holding and not
holding stock
• Stock replenishment
systems
• Objectives of an Effective
Warehouse
• Warehouse Performance
Measures

6. Warehousing & Inventory Management
Session 1:
Warehouse Functions & Costs

7. 7
Session 1 Objectives
• Identify the various
functions and
responsibilities of the
warehouse/stores function.
• Identify the various costs
associated with holding or
not holding inventory.

8. 8
Session 1 Content
• Functions and
Responsibilities of
stores/warehouse
• Reasons for holding stock
• Cost of holding and not
holding stock
• Stock replenishment
systems

9. 9
Definition of a Warehouse
• Part of firm’s logistics
system that stores products
at and between point of
origin and point of
consumption.
• Term “Warehousing” is
referred as transportation
at zero miles per hour
• Warehousing provides time
and place utility for raw
materials, industrial goods,
and finished products
• Perform the same function
as a warehouse for a factory
• raw materials
• finished goods
• supplies
• repair parts
• The warehouse is where the
supply chain holds or stores
goods.

10. 10
Group Activity 1
• Describe the different
functions and activities of a
warehouse in your
organisation
• Rank the functions according
to importance to the
organisation

11. 11
Warehouse Functions and Activities
Receive goods Identify goods
Dispatch
goods to
storage
Hold goods Pick goods
Marshal the
shipment
Dispatch the
shipment
Operate an
information
system

12. 12
Warehouse Functions and Activities
Receive Goods
• Acceptance of goods from
outside transportation or an
attached factory
• Check the goods against an
order or bill of lading
• Check the quantities
• Check for any transit damage
• Inspect goods if required
Identify Goods
• With appropriate Stock
Keeping Unit (SKU) number
• With part number
• Indicate the quantity

13. 13
Warehouse Functions and Activities
Dispatch goods to Storage
• Goods are sorted
• Put away goods
• record the location
Hold Goods
• Storage is meant to protect
the goods from
deteriorating
• cold
• heated
• explosive

14. 14
Warehouse Functions and Activities
Pick Goods
• Goods are picked from
storage
• must be accessible
• location records
• Brought to marshalling area
Marshal the Shipment
• All goods for an order are
brought together
• check for missing items
• check for correct items
• change order information if
required

15. 15
Warehouse Functions and Activities
Dispatch the Shipment
• The order is prepared for
shipment and loaded on the
right vehicle
• protective packaging for
shipment
• documents prepared
• loaded and secured
Operate an Information System
• Need to know what is in the
warehouse
• quantity on hand
• quantity received
• quantity issued
• location of goods
• Computer based or manual
system

16. 16
Types of Warehousing
• Supply Warehouse
• Distribution Warehouse
• Commercial Warehouse
• Government/State
Warehouse
• Transit Warehouse
• Bonded Warehouses
• Open Storage
• Pre-fabricated Warehouses

17. 17
Group Activity 2
• Some organisations pride
themselves in only holding
minimal amounts of stock or
not holding stock at all.
• List the different reasons why
your organisation holds
inventory/stock

18. 18
Reasons for Holding Inventory
To meet expected
demand
To guard against
shortages
To benefit from
discounts
To deal with
variations in usage
or demand
To facilitate the
production process
In times of high
inflation/ supply
shortages
Some processes
require holding
work in progress

19. 19
Cost of holding or not holding stock
• To manage your stock
successfully, you need to
find a balance between the
costs and benefits of
holding stock.
• The costs of holding stock
include the money you have
spent buying the stock as
well as storage and
insurance.
• Having too much stock
equals extra expense as it
can lead to a shortfall in
cash flow and excess
storage costs
• Having the wrong stock
means lost income in the
form of lost sales, write-downs
and poor customer
service.
Holding Stock Not holding Stock

20. 20
Group Activity 3
• Discuss Hand-out 1: “ To
hold or not to Hold”
• Answer the questions at the
end of the case study

21. 21
Stock Replenishment – ROP
• The reorder point ("ROP") is
the level of inventory which
triggers an action to
replenish that particular
inventory stock.
• Replenishment Lead Time
(RLT) is the total period of
time that elapses from the
moment it is determined
that a product should be
reordered until the product
is available for use.
• RLT is also known as the
Reorder Cycle

22. 22
Stock Replenishment –EOQ
• At ROP a Replenishment
Order matching the
Economic Order Quantity
(EOQ) is generated
• EOQ is the order quantity
that minimizes total
inventory holding costs and
ordering costs.

23. 23
Session 1 Summary

24. 24
Session 1 Objectives
• Identify the various
functions and
responsibilities of the
warehouse/stores function.
• Identify the various costs
associated with holding or
not holding inventory.

25. Warehousing & Inventory Management
Session 2:
Warehouse Design & Performance

26. 26
Session 2 Objectives
• Describe and contribute in
the design of an effective
warehouse
• Explain how to measure the
performance of a
warehouse

27. 27
Session 2 Content
• Objectives of an Effective
Warehouse
• Warehouse Performance
Measures

28. Objectives of Warehouse Management
28
• Maximum use of space
• capital cost of space is very
high
• Effective use of labor and
equipment
• material handling equipment
is the second largest capital
cost
• need best mix of equipment
and labor
• all SKU’s should be easy to
find
• move goods efficiently

29. 29
Warehouse Effectiveness – Concepts
Stock location
Cube utilization
and accessibility
Order picking
and assembly

30. 30
Warehouse Effectiveness - Space
• Goods are stored on the floor and in
the space above
• Space also required for:
• Aisles
• Offices
• Receiving
• Order picking
• Shipping docks
• Order assembly
• Need to know the maximum space
required
Stock location
Cube utilization
and accessibility
Order picking
and assembly

31. 31
Warehouse Effectiveness - Storage
• Floor storage
• Pallets are stacked on each other
• Maximum stacking height
• due to ceiling height/ weight restrictions
• Need to allow for side clearance
Stock location
Cube utilization
and accessibility
Order picking
and assembly

32. Warehouse Effectiveness–Pallet Space
32
Stock location
Cube utilization
and accessibility
Order picking
and assembly

33. 33
Activity 4
• A company wants to store an
SKU consisting of 13,000
cartons on pallets each
containing 30 cartons. How
many pallet positions are
needed if the pallets are
stored three high?

34. 34
Warehouse Effectiveness - Location
• Group functionally related items
together
• Group fast moving items together
• Group physically similar items together
• Separate working from reserve stock
• Items that are similar in their use or
characteristics
• warehouse staff become familiar with
items
• similar order processing needs
• often ordered together
• hardware items
• bulk items
• security
Stock location
Cube utilization
and accessibility
Order picking
and assembly

35. 35
Warehouse Effectiveness - Location
• “A place for everything and everything
in its place”
• Fixed Locations reduce record keeping
• Usually results in poor space utilization
• space must be available for the
replenishment order quantity
• average of 50% utilization
Stock location
Cube utilization
and accessibility
Order picking
and assembly

36. Warehouse Effectiveness– Accessibility
36
Stock location
Cube utilization
and accessibility
Order picking
and assembly
• The ability to get goods with a
minimum of effort
• without moving other goods
• can be a problem with multiple SKU’s in
one area

37. 37
Warehouse Effectiveness– Utilization
Stock location
Cube utilization
and accessibility
Order picking
and assembly
• A measure of how well space is utilized
• Should also consider accessibility
• Racking allows accessibility to all
goods while improving utilization

38. Warehouse Effectiveness– Utilization %
38
Stock location
Cube utilization
and accessibility
Order picking
and assembly
(Space Used) x 100
Utilization % = (Total Space)

39. 39
Activity 5
• A warehouse has space for 14
pallets along its length and
stacked 3 high.
• The following items (SKU) are
stored in the warehouse
Item Pallet Pallet
• What is the Utilisation?
Position
SKU A 4 2
SKU B 6 2
SKU C 14 5
SKU D 8 3
SKU E 5 2

40. Warehouse Effectiveness–Order Picking
40
• Once an order is received it must be:
• retrieved
• assembled
• prepared for shipment
• Involves labor and movement of goods
to provide desired level of customer
service
• Order Picking Systems
• Area System
• Zone System
• Multi-Order System
• Working & Reserve Stock
Stock location
Cube utilization
and accessibility
Order picking
and assembly

41. 41
Warehouse management for profit
• The purpose of companies
is to gain competitive
advantage.
• One way to achieve this is
by lowering logistics costs.
• The reduction of logistics
costs diminishes the total
cost of goods sold and
therefore it helps companies
have a higher profit margin
or a cost advantage in
comparison with their
competitors.

42. 42
Inventory Performance KPIs
MEASURE CALCULATION
Damaged Inventory (min.) Total Damage (GH₡) / Inventory Value
Days on Hand (min.) Avg. Month Inventory (GH₡) / Avg. Daily
Sales/Month
Storage Utilisation (max.) Avg. Occupied Sq. m. / Total Storage
Capacity
Dock to Stock Time (min.) Total Dock to Stock Hrs. / Total Receipts

43. 43
Warehouse Performance Indicators
MEASURE CALCULATION
Orders per Hour (max.) Orders Picked or Packed /
Total Warehouse Labor Hrs.
Items per Hour (max.) Items Picked/Packed /
Total Warehouse Labor Hrs.
Cost per Order (min.) Total Warehouse Cost /
Total Orders Shipped
Cost as % of Sales (min.) Total Warehouse Cost /
Overall Sales

44. 44
Group Activity 6
• Discuss Hand-out 2:
“Warehouse Performance
Case Study”
• Answer the questions at the
end of the case study

45. 45
Session 2 Summary

46. 46
Session 2 Objectives
• Describe and contribute in
the design of an effective
warehouse
• Explain how to measure the
performance of a
warehouse

47. 47
Workshop Objectives
• Identify the various
functions and
responsibilities of the
warehouse/stores function.
• Identify the various costs
associated with holding or
not holding inventory.
• Describe and contribute in
the design of an effective
warehouse
• Explain how to measure the
performance of a
warehouse

48. 48
Contact us
Contact: Margaret Jackson
Telephone: +233 244 363 387/ +233 303 308 659
Email: info@rainbow-consult.com
Website: www.rainbow-consult.com