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GLOBAL PURCHASING & MATERIALS HANDLING
CHAPTER VI
WAREHOUSE MANAGEMENT
OUTLİNE
Warehouse Activities
Warehouse Management
How to supply an efficient warehouse.
Warehouse Layout
Warehouse Auditing
RFID and Warehose Technologies
WAREHOUSE
A combination of two words ‘ware’ and
‘house’ which means that it is a place to
house or store wares like items or articles.
WAREHOUSE
Stores inventory for a period of time.
Storage of raw materials especially
Protection of goods or materials.
Turn over inventory rapidly as a distribution center.
Warehouses store,
Raw materials
Finished Goods
Supplies and spare parts.
WAREHOUSİNG MANAGEMENT
The objective of warehousing is to minimize cost
when realizing maximum customer service by
Providing timely customer service
Keeping track of items so that they can be found readily
and correctly.
Minimizing the total physical effort and thus the cost of
moving goods into or out of storage.
Providing communication with customers.
WAREHOUSE ACTİVİTİES
Receive Goods:
Identify goods
Dispatch goods to storage
Hold goods
Pick goods
Marshal the shipment
Dispatch the shipment
Operate an information system
WAREHOUSE ACTİVİTİES
Receive Goods: Accepting goods from outside
transportation or an attached factory.
Checking the goods against an order or bill of lading.
Checking the quantities
Checking for any damage
Inspection of Goods if required.
WAREHOUSE ACTİVİTİES
Identify Goods: Items are identified with the
appropriate stock keeping units(SKU) ,number(part
number) and the quantity. These data are recorded.
Dispatch Goods to Storage: Goods are sorted and
put away. The location of goods must be recorded.
Hold Goods: Storing goods by protecting from
environmental factors.
WAREHOUSE ACTİVİTİES
Pick Goods: Items are selected from storage and
brought to marshalling area. When realizing this,
items must be accessible.
Marshal the shipment: Checking for missing and
correct items,order records are updated if necessary.
Dispatch the shipment: Orders are packaged,
shipping documents are prepared and goods loaded
on the vehicle.
WAREHOUSE ACTİVİTİES
Operate an Information System: We need to know
what is in the warehouse, what came into storage in the
past, quantity, what will come into storage tomorrow,
when a particular good will come into storage e.t.c. This
system which we need can be very simple or may be a
sophisticated computer based system.
The complexity of system depends on number of SKUs
handled, the quantity, number of orders received and
fulfilled.
WAREHOUSE MANAGEMENT
Maximum Use of Space: This means not only the floor
space but also the cubic space. But maximizing the space
necessitates capital cost.
Effective use of Labor and Equipment: Materials handling
equipment has the second – largest capital cost after
space cost and labor cost has the largest operating cost.
This situation represents a trade-off.
We can increase capital cost by investing machine but
labor costs reduces.
WAREHOUSE MANAGEMENT
Maximum Use of Space(Cube Utilization): This means not only
the floor space but also the cubic space. But maximizing the
space necessitates capital cost. Cube utilization is the use of
space horizantally and vertically.
Effective use of Labor and Equipment(Accessibility): Materials
handling equipment has the second – largest capital cost after
space cost and labor cost has the largest operating cost.This
situation represents a trade-off.
We can increase capital cost by investing machine but labor
costs reduces.
WAREHOUSE MANAGEMENT
We have to select the best mix of labor and equipment
to maximize the productivity of the operation.
Providing ready access to all SKUs should be easy to
identify and find material.
Most of the activity that goes on in a warehouse is
materials handling, so moving of the goods must
manage efficiently.
EFFECTİVE WAREHOUSE MANAGEMENT
Cube Utilization and Accessibility
Stock Location(Layout)
Order Picking and Assembly
Packaging
EFFECTİVE WAREHOUSE MANAGEMENT(CUBE UTİLİZATİON AND ACCESSİBİLİTY)
Goods are stored on the floor and in the space above.
Space is also required for aisles receiving and loading,
order picking , order assembly and offices.
Pallet positions verify the cube utilization.
EFFECTİVE WAREHOUSE MANAGEMENT(CUBE UTİLİZATİON AND ACCESSİBİLİTY)
EFFECTİVE WAREHOUSE MANAGEMENT(CUBE UTİLİZATİON AND ACCESSİBİLİTY)
Pallet position is related to
Floor storage
Whether pallets are stacked on eachother
Maximum stacking height(Ceiling height and
weight restriction, HSE regulations)
EFFECTİVE WAREHOUSE MANAGEMENT(CUBE UTİLİZATİON AND ACCESSİBİLİTY)
Accessibility means the ability to get goods with
a minimum of effort, Without moving other goods,
As long as all pallets contain the same SKU,
there will be no problem with accessibility.
When several SKUs are stored in the area, each
product should be accessible with a minimum
difficulty.
EFFECTİVE WAREHOUSE MANAGEMENT(CUBE UTİLİZATİON AND ACCESSİBİLİTY)
ProductA
ProductA
ProductA
ProductA
ProductA
ProductB
ProductB
ProductC
ProductC
ProductC
ProductD
ProductE
Utilization = 12 pallets / (5 x 3) spaces = 80%
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Layout is concerned with the location of
individual items in the warehouse. There is no
single universal stock location system suitable
for all occasions.
Which system will be used depends on the type
of goods,the size of orders and too many
conditions similar to these ones.
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Basic Layout Systems:
1. Group functionally related items together:
For example; putting all hardware items in the same
area of the warehouse. If functionally related items
are ordered together, order picking is easier. And
moreover, personnel is familiar with the location of
item.(Hardware items, bulk items)
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Basic Layout Systems:
2. Group fast moving items together: If fast-
moving items are placed close to the receiving or
shipping area, the work of moving them is
reduced.Slower-moving items can be placed in
more remote areas of the warehouse.
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Basic Layout Systems:
3. Group physically similar items together:
Physically similar items often require their own
particular storage facilities and handling
equipment.(Small packaged items, tires,
drums,cartons or frozen foods)
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Basic Layout Systems:
4. Locate working stock and reserve stock
seperately: Working stock can be located close to
shipping area whereas reserve stock used to
replenish the working stock can be located more
remotely. This allows order picking to occur in a
compact area.
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Fixed Location: An SKU is assigned a permanent location and no
other items are stored there. This system reduces amount of
record keeping and it results in poor cube utilization. Fixed
Location Systems are often used in small warehouses.
Floating Location: Goods are stored wherever there is
appropriate space for them.The advantage of this system is its
improving cube utilization.On the other hand, it requires
accurate and up-to-date information on locations.So we have to
use computer-based systems in the warehouses using this
model.
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Point-of-use storage: In a repetitive manufacturing and
JIT environment, inventory is stored close to where it will
be used.There several advantages of this model.
Materials are readily accessible to users at all times.
Material handling is reduced or eliminated.
Central storage costs are reduced.
This method is excellent as long as inventory is kept low
and personnel can keep control of records.
EFFECTİVE WAREHOUSE MANAGEMENT(LAYOUT)
Central storage: As opposed to point-of-usage model, ın
this model all inventory is in one central location
Ease of control.
Inventory accuracy is easier to maintain.
Specialized storage can be used.
Reduced safety stock, since users do not need to carry
their own safety stock.
EFFECTİVE WAREHOUSE MANAGEMENT(ORDER PİCKİNG AND ASSEMBLY)
Once an order is received,
It is retrieved, assembled, and prepared for the shipment.
These processes contains,
Labor
Data Flow
Movements of goods or material.
There are several systems that can be used to
organize these processes.
EFFECTİVE WAREHOUSE MANAGEMENT(ORDER PİCKİNG AND ASSEMBLY)
Area System: The order picker circulates
throughout the warehouse selecting the items on
the order like in a supermarket. Then, the items are
taken to the shipping area.This system is generally
used in small warehouses where goods are stored in
fixed locations.
EFFECTİVE WAREHOUSE MANAGEMENT(ORDER PİCKİNG AND ASSEMBLY)
Zone System: The warehouse is divided into areas
and order pickers work only in their own area and
deliver materials to the marshalling area. Zones are
established by means of;
Type of storage
Type of material handling required.
Orders are prepared for the shipment in the
marshalling area.
EFFECTİVE WAREHOUSE MANAGEMENT(ORDER PİCKİNG AND ASSEMBLY)
Multi-order System: It is a mixed type of area and
zone systems. Multiple orders are gathered
together and all the items are divided by zone. It is
used where there are many items or many small
orders. Advantage Disadvantage
Area Simple to manage and control If order size increases, it becomes unwieldy
ZoneBetter to manage, because, process is
separated into small areas.It may increase personnel
cost
MultiMost suitable for the situation in which
there are many items. -
PHYSİCAL CONTROL
Inventory is tangible and always have a risk of
becoming lost, stolen and it is always open to
failure.
Thus, we need a system to make it difficult for
people to make mistakes or forget to update
records. It is maintained by means of;
A good part numbering system
A simple well documented transaction system
PHYSİCAL CONTROL(PART NUMBERİNG)
Each part has an unique number used only for that
part.
Every part must have descriptive part numbers to
assist in order picking and process.
PHYSİCAL CONTROL(TRANSACTİON)
1. Identify the item: Errors occur due to incorrect
identification.After receiving an item, the order
specifications(quantity ,part number and everything
about the order) must be identified.The location of item
must be accessible for everyone in the warehose system.
2. Verify quantity: Manual counting or Standart sized
containers.
3. Record Transaction: Recording all information.
4. Execute Transaction:Moving the goods.
ACCURACY OF İNVENTORY
Efficieny in a warehouse is up to the accuracy of
inventory, because you decide to buy or not, release
order or not and make a financial analyses according to
stock quantities.
If not so, there will be shortages or overstock of
materials,disrupted schedules,late deliveries, lost sales.
Especially part description, quantity and location must
be definetely accurate.
ACCURACY OF İNVENTORY
Causes of Inventory Errors
• Unauthorized withdrawal of material
• Unsecure stockroom
• Poorly trained personnel
• Inaccurate transaction recording
• Poor transaction recording system
-system should reduce the likelihood of human error
• Lack of audit capability
ACCURACY OF İNVENTORY
Tolerance:
AUDİTİNG İNVENTORY RECORDS
Periodic(Annual) Inventory Control: The aim is to correct
on hand balance. All types of material is counted and
compatability of shelf and system stocks are checked.
Cycle Counting: The aim is to find the reasons for error
and to prevent from them.Inventory is counted
throughout the year.Some items are counted frequently
depending on its value or past history problems.
AUDİTİNG İNVENTORY RECORDS
Periodic(Annual) Inventory Control:
The primary purpose is to satisfy financial side.
Planner side is interested in all details of
material.
Financial side is concerned with only the total
value.
AUDİTİNG İNVENTORY RECORDS
Periodic(Annual) Inventory Control:
This control method has some disadvantages:
It takes too much time,but is is wanted to be realized
in a short time.
Factory shutting down causes production loss.
Open to cover error with new errors.
People may not be familiar with the items
Labor and paperwork effort.
AUDİTİNG İNVENTORY RECORDS
Cycle Inventory Control:
This control method has some advantages:
Timely correction of problems:
Reduction of loss production:
Training of personnel: Familiar with the items, fewer
errors , able to identify problems.
AUDİTİNG İNVENTORY RECORDS
Counting Frequency:
Management establishes a rule for how many times an
item should be counted per year
e.g. ‘A’ items once per month, ‘B’ items quarterly, ‘C’
items twice per year
a mix of all items is counted every day
computerized systems can identify daily lists of items
to count
TECHNOLOGY APPLİCATİONS
Barcodes:
Paper labels which show a product code
RF Tags:
Radio Frequency
do not need to ‘see’ the item
These technological applications;
Reduce recording errors,
Improve transaction speed.
Barcode and RFID concepts will be discusses in Term Projects.
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