0. Unit 4: Warehouse Management
Supply Chain Management
Unit 4: Warehouse Management
Read Lesson Link aloud to the students:
In this module, you will begin to understand what warehouses are and why they are needed. We examine the activities that occur in warehouses and the practices successful warehouses implement. We will also discuss some of the resources available to those interested in learning more about supply chain management and warehousing.
Module 1: Introduction to Warehouse Operations

1. Learning Objectives
Determine the need for warehouses and inventory management
Identify the various types of warehouses
Identify and describe the different types of warehouse processes
Describe the Plight of the Warehouse Manager
Identify World-Class warehousing principles
Introduce industry specific professional organizations

2. Why are warehouses and inventory management needed?
QUESTION
Why are warehouses and inventory management needed?
Storage of goods
Reduce transportation costs
Improve operational flexibility
Shorten customer lead times
Lower inventory costs

3. This is the most basic operation performed by warehouses
Storage of Goods
This is the most basic operation performed by warehouses
Evens out the flow of goods in the supply chain by storing goods until they are needed
In it simplest form, warehouses store material until it is needed.

4. QUESTION What is inventory?
Goods that support the production of raw materials and unfinished items
Items used for maintenance, repair, and operating supplies
Raw goods, finished goods and spare parts
Post-consumer items such as returns, scrap, and recyclable materials

5. Why is Inventory Management Needed?
Inventory is a necessity
Supports production and manufacturing activities
Covers for exceptions in the supply chain
Supports maintenance, repairs, and operations
Supports customer service activities
Supports post-consumer activities
Offers strategic opportunities to the supply chain
There are costs associated with having inventory
Holding costs
Setup costs
Purchasing costs
Balance inventory levels with cost of holding inventory
Minimize costs
Not too much excess inventory
Enough inventory to respond to demand when it is needed

6. Types of Warehouses Raw Material Warehouse
Work in Process (WIP) Warehouses
Finish Goods Warehouses
Distribution Warehouses and Distribution Centers
Fulfillment Centers
Climate-Controlled Warehouses
Special Case (Foreign Trade Zone and Bonded Warehouses

7. Raw Material Warehouse
These warehouses are generally large in scale and designed to hold large quantities of bulk materials. Two examples of raw materials warehouses might be petroleum warehouses that store raw crude oil and grain silos that house grains and corn.

8. Work In Process (WIP) Warehouse
WIPs hold partially completed assemblies and products at various points along an assembly or production line. They can occupy a small footprint inside a factory or manufacturing center or can be located in a separate facility.

9. Warehouses - Other
Finished goods warehouses - Usually located near the manufacturing center, finished goods are stored here until there is a demand for them.
Distribution warehouses and distribution centers - collect and consolidate goods from many sources and then provide consolidated delivery into a network of common customers.

10. Warehouses - Other
Fulfillment warehouses and centers - receive goods from distribution centers and ship them to individual customers.
Climate Controlled Warehouses:
Frozen foods, chilled foods,
and products that must be
maintained at a set temperature
are shipped through
climate-controlled warehouses.

11. Warehouses - Other Special Case Warehouses
Foreign Trade Zones (FTZs) - a designated area within the borders of the USA that is treated as being outside of U.S. Customs Territory for the purpose of customs duty payment.
Bonded Warehouse - Similar to an FTZ, a Bonded Warehouse is a secured facility under the control of U.S. Customs where imported materials are stored with the purpose of delaying the payment of tariffs and duties. There are, however, several key differences between a Bonded Warehouse and an FTZ.

13. Private vs. Public Warehouses
Private warehouses are warehouse facilities owned by a distributor or manufacturer and strictly used for their sole purposes. The inventory stored and the activities performed in these facilities support the goals of the organization.
Public warehouses seek economies of scale by sharing resources. They generally store and manage multiple customers’ inventories and can leverage the space and warehouse resources across these multiple customers.

14. Typical Warehouse Layout
Bulk
Storage
Case Pick
Value-add
Processing Area
Staging Area for Receiving and Shipping
Typical Warehouse Layout
Receiving area
Staging area
Storage area
Value-add area

15. Receiving Area
The receiving area of a warehouse contains dock doors sufficient to accommodate the conveyance equipment that delivers material into the warehouse facility.

16. Staging Area
The staging area is the temporary containment of material for inspection, unpacking or packing, and repackaging of material for subsequent storage or shipment.

17. Storage Area
Storage areas are where material is stored until needed. These areas are where warehouse material handling equipment such as racking, shelving and other storage media are set up.

18. Value-Add Area
For warehouses that are performing value-added activities such as kitting, sequencing, repackaging, labeling, or minor sub-assembly, a designated area is set up to ensure that the appropriate amount of space necessary to perform the activities is available and to accommodate the equipment needed to perform these activities.

19. Warehouse Flow
Warehouses typically use one of three layouts: U-shape, Straight-thru, or Modular.
The U-shaped layout is the most popular layout.
A typical “U” formation brings material in the front of the warehouse, stores and/or processes it in the middle and back of the warehouse, and then ships it out the front of the warehouse.
The layout and thus the flow through the warehouse are dependent on the size of the facility; the number and placement of the dock doors; and the characteristics of the activity occurring in the warehouse.

20. Warehouse Operations Receiving Pre-packaging (optional) Put-Away
Storage
Order Picking
Packaging and/or Pricing (optional)
Sortation and/or Accumulation
Unitizing and Shipping

21. Plight of Warehouse Management
More / smaller transactions
Manage more items
More product and service customization
More value-added services
More returns
More international orders
Less time for ORDER PROCESSING / MARGIN OF ERROR
Less Skilled WMS Labor

22. World-class Warehousing Practices Take Warehouses from Stage 1 to Stage 5
Stage 1 = no-class … Stage 5 = world-class

23. World-Class Warehousing Practices

24. Professional Organizations
International Warehousing Logistics Association (IWLA).
Warehousing and Education Research Council (WERC).
Council of Supply Chain Management Professionals (CSCMP).
National Association of Foreign Trade Zones (NAFTZ).
American Society for Quality (ASQ).

25. Summary Warehouses are a critical part of the supply chain.
Materials moving through the supply chain enter warehouses, where they are handled, stored, and ultimately shipped downstream to customers when needed.
Understanding the types of warehouses and the roles they play in the supply chain is a prerequisite to knowing when and why to select a particular type of warehouse to satisfy customer needs.

26. Summary, cont.
Most warehouses are configured to handle the same set of activities: receiving, prepackaging, put-away, storage, order picking, accumulation and sortation, packaging and/or pricing, and unitizing and shipping.
The key to successful implementation of best-practice warehousing operations requires obtaining and understanding a comprehensive item level analysis of the material being handled, and then using that information to make warehousing decisions