OME 664: PROJECT PROCUREMENT AND

CONTRACTING

LECTURE THREE: WAREHOUSE

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 What is warehouse management?
• Warehouse management is the control of
the day-to-day operations of a warehouse,
such as the shipping, receiving, put-away
and picking of goods.
• It is the process of coordinating the
incoming goods, the subsequent storage
and tracking of the goods, and finally, the
distribution of the goods to their proper
destinations.

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Is it the same as Stock Control?
• The term is sometimes used interchangeably with
the ‘stock control’ or ‘inventory control’. However,
they differ in a number of respects.
• Stock control aims to maximize profit by getting
inventory right, whereas Warehouse Management
aims to maximize the efficiency and effectiveness of
warehouse operations.
• Secondly, stock control means you know how many
of a particular product you have and when to order
more; Warehouse Management tells you which bins
those items are in and the order in which they need
to be picked.
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 The major warehouse operations
1. Inbound processes
– Receiving (~10% of warehouse operating costs): the
collection of activities involved in
• the orderly receipt of all materials coming into the
warehouse;
• providing the assurance that the quantity and quality of
such materials are as ordered;
• disbursing materials to storage or to other organizational
functions requiring them.
– Put-away (~15% of warehouse operating costs): the act of
placing merchandise to storage; it includes
• determining and registering the actual storage location(s)
• transportation
• Placement
- Managing returns: returned goods need to be
unloaded before the vehicle is available for loading
again – these goods then need to be checked off
against the original order and the information logged
against your customer’s account.
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 The major warehouse operations (cont.)
2. Outbound processes
– Processing customer orders (typically done by the
computerized warehouse management system of the
facility): This set of activities includes
• checking that the requested material is available to ship;
• if necessary, coordinating order fulfillment with other
facilities of the distribution network;
• producing the “pick” lists to guide the order picking and
the necessary shipping documentation;
• scheduling the order picking and the shipping activity.
– Order-picking (~55% of warehouse operating costs): the set
of physical activities involved in collecting from the storage
area the materials necessary for the fulfillment of the various
customer orders, typically identified as:
• traveling (~55% of the order picking time)
• searching (~15% of the order picking time)
• extracting (~10% of the order picking time)
• documentation and other activities (~20 % of the order
picking time)
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 The major warehouse operations (cont.)
• Outbound processes (cont.)
– Checking: Checking orders for completeness (and quality
of product)
– Packing: Packaging the merchandise in appropriate
shipping containers, and attaching the necessary
documentation / labels.
– Shipping: The activities of
• preparing the shipping documents (packing list,
address label, bill of lading);
• accumulating orders to outbound carrier;
• loading trucks (although, in many instances, this may
be the carrier’s responsibility)

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 Role and duties of warehouse managers
• Warehouse Managers are in charge of the
administrative aspects of warehouses and
other storage facilities.
• It is their job to coordinate the activities of all
workers, contact and liaise with customers,
oversee the receiving and shipping of goods,
and ensure that all items are properly stored
in an efficient and orderly manner.
• The common duties include:

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 Roles and duties cont…
1. Supervising the activities and daily tasks of Warehouse
Workers:
• Ensuring that all products, items, or materials received are
sorted, labeled, and stored in an orderly fashion according
to company policies and standards;
• issuing lists of incoming shipments and items and handing
them to receiving personnel;
• checking inventory regularly in order to ensure that all
items are accounted for;
• preparing a list of outgoing shipments according to
customer’s requests;
• assigning time sheets and work schedules to Warehouse
Workers;
• assisting Warehouse Workers with their tasks when
necessary; and
• interviewing and training new employees. 10
 Roles and duties cont…
2. Liaising with customers and employers regarding
storage capacity and availability:
• Explaining customers storage policies and available
spaces;
• ensuring there is enough space to store goods for
customers and employers;
• making special arrangements for customers with
goods that require particular attention;
• explaining fees to customers based on volume,
weight, or time of storage according to company
policies; and
• providing customers and employers with regular
reports of the products they have in store.
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 Roles and duties cont…
3. Reviewing and adapting warehouse
operations according to shipping schedules.
4. Conducting regular inspections on warehouse
conditions, as well as that of vehicles, tools,
and equipment by:
• Ensuring emergency equipment is in place and
working properly; and
• supervising and ensuring that all safety and
emergency policies and procedures are
followed.
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 Key skills for warehouse managers
• Good team-working skills
• Managerial skills
• Interpersonal skills
• Oral and written communication skills
• Logical reasoning
• Numerical skills
• Technical skills
• IT skills

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 Centralization and Decentralization of
warehouse function
• The most common warehouse configurations are
either centralized, wherein all products are
shipped from one primary location, or
decentralized, a method of maintaining several
smaller warehouses spread out to different areas
in order to better serve different markets or
stocking different products.
• Each method has their own advantages and
disadvantages:

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 Centralized Warehouses
• -A common advantage of centralized warehousing is the
reduction of operating costs. By choosing to centralize
your distribution centers, the need to pay rent and
utilities is reduced drastically.
• These reduced costs can also allow you to set easier
pricing strategies due to the stable nature of inventory
management, allowing for higher margins, lower prices,
or both.
• Better customer service. By choosing to limit the number
of warehouses or distributors, a company can now
focus its resources on fewer facilities. This means the
facility will have the highly skilled workers, the latest
technology and the best equipment. If all of these are in
one facility, the highest quality of service could then be
offered to customers.

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 Advantages of centralized
• Reduced Inbound Costs- A centralized
warehouse would also decrease the cost of
shipping and transportation because of the
ability to bank larger inventories

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 Disadvantages of Centralized Warehouse
• A big drawback to centralizing your distribution is
increased outbound shipping costs.
• Particularly with rush deliveries or long-term
inventory shipments, centralized locations can
increase the cost of shipping to certain parts of
your market/project, which may translate to
higher costs for the customer/project – and in
this age of increased demand for consumer
convenience, shipping costs can be the reason
for making or breaking a sale.

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 Disadvantages of centralized cont..
• Risk: If most of the inventory is in one
centralized warehouse, the project could lose
millions of dollars if a fire were to break out and
destroy the entire stock.

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 Decentralized Warehouses
• One of the biggest advantages of decentralizing
your shipping and receiving is a reduction in
delay of material handling.
• Wherever your products are coming from,
having a connected network of warehouses and
supply facilities will allow you to receive
products more quickly and get them out to your
customers more quickly.

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 Disadvantages of decentralized
warehouse operations
• The biggest problem with decentralizing your
warehousing is one of the most obvious issues:
increased operating costs.
• Even with all the benefits in stocking and shipping
that this approach brings, the fact of the matter is
you’re still faced with the costs of owning/renting,
maintaining, and outfitting more than one
warehouse.
• Whatever your approach, always think your plan
through and weigh each method to see what’s best
for your project.
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 Performance evaluation of warehouse
operations
• A warehouse performance measurement is a
method to measure activity performance, program
or service which is provided by a warehouse.
• Performance measurement system refers to sets of
metric used to quantify both the efficiency and
effectiveness of action.
• Various methods exist for classifying warehouse
performance measures.
• However, Frezelle model classify performance
measured into 25 KPIs throughout the warehouse
activity i.e. financial, productivity, utilization,
quality and cycle time.
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 Which Metric is the KPI?
Kusrini et al. 2017 conducted a study in Indonesia
as came up with the following findings:
KPI for receiving is productivity (Receipt per man-
hour),
KPI for put away is cycle time (put away cycle
time),
KPI for storage is utilization (% location and cube
occupied),
KPI for order picking is cycle time (order picking
cycle time) and
KPI for shipping is productivity (order prepared for
shipment per man-hour).
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 Warehouse Safety Principles
1. Promote Awareness in your Warehouse
• This can be achieved through communication
between staff members as having a sense of
awareness in the work place is an important
safety factor.
• All staff members should be encouraged to be
constantly aware of what’s around them and to
communicate where they are to ensure the
avoidance of accidents.

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 Warehouse Safety Principles
cont..is Used at all Times
2. Ensure Safety Equipment
• It is vital that forklifts or hydraulic dollies are
used to lift items that are too heavy.
• Appropriate eyewear and hard hats should also
be worn when required.
• Employees should be aware of emergency exits
and the sprinklers installed in the roof should not
be blocked at any time.
• Safety equipment is implemented in order to
minimize workplace injury, so although it may be
time consuming to initiate its use, it does pay off
in the long run.
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 Warehouse Safety Principles
cont..
3. Eliminate Any Potential Safety Hazards
• Ensure all warehousing floors are free of ‘slip and
trip’ hazards.
• It is important that this safety check is carried
out on a regular basis, by all employees, and that
the floor is always free of stray cords, liquids and
any other potentially hazardous items.
• It is also essential that any cracks and pits in the
flooring are attended to as these can cause
serious injuries to employers as well as damaging
expensive machinery.
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 Warehouse Safety Principles
cont..
4. Clearly Label Designated Hazardous Zones
• Dangerous equipment should be stored away in
an area that is clearly labeled and safe walk ways
should be highlighted through necessary signage.
• The easiest way to illuminate hazardous zones is
by using tape or painting black and white stripes
on the floor of the designated area.
• This enables employees to be aware of
dangerous surroundings and can be useful in
avoiding accidents that can cause serious injury.
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 Warehouse Safety Principles cont..
5. Always Use Safe Lifting Techniques
• When a load requires transporting, firstly assess what
method is the best option for its movement.
• If lifting is the most suitable method; check the route to
ensure no obstacles are in the way and ensure there is
enough space for the load at its destination.
• Safe lifting techniques should always be carried out and
the load should not obstruct the view of the lifter. Use all
materials handling equipment carefully and follow the
proper operating procedures including push rather than
pull, whenever possible and lean in the direction that is
being travelled.
• Also, never drive a forklift or use other powered
equipment without training or authorization.
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 Warehouse Safety Principles cont..
6. Provide Training and Refresher Courses
• Ensure all staff are educated and up to date with
knowledge about safe practices within the
workplace.
• This allows for greater adherence to procedures as
staff members will be completely aware of the
consequences that can emanate from an unsafe
workplace.
• Accidents most commonly occur when corners are
cut in an attempt to save time. If staff and
management are completely aware of the
repercussions that can arise from this fact,
procedures may be followed more closely.
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Some Safety Signs used in Warehouse

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 Storage equipment and methods
Equipment Classification
• Containers & Unitizing/consolidation Equipment
• Storage and Retrieval Equipment
– Unit Load
– Small Load
• Conveyors
• Warehouse docks and dock-related equipment
• Automatic Identification and Communication
Equipment
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 The role of equipment in warehouse
operations
1. Reduce cost (labor + space)
– enhance space utilization by, e.g.,
• enabling the exploitation of the vertical
dimension of the facility
• allowing for denser packing
– allow for more efficient order-picking by, e.g.,
• increasing the SKU density (Store keeping
Unit- is a product code that is used to
search and identify stock on hand from lists,
invoices or order forms.
• supporting the automated transfer of
material from storage to sorting and
consolidation area 32
2. Enhance responsiveness
– increase the throughput of the facility,
e.g.,
• increasing the SKU density
• establishing a more ergonomic
environment/arrangement for the
warehouse operators
• facilitating the parallelization of order
picking
• by parallelizing the tasks of order-
picking and replenishment
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 The role of equipment in warehouse operations (cont.)
3. Maintain Quality of Product and Operations
– provide an orderly storage environment
– provide efficient ways for product tracing and
identification
– provide safe and secure material handling
– facilitate order sorting and consolidation
– establish and maintain a controlled
environment e.g.,
• temperature control
• access control
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End

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