INTRODUCTION

A warehouse is a commercial building for storage of goods. Warehouses are used

by manufacturers, importers, exporters, wholesalers, transportbusinesses, customs
, etc. They are usually large plain buildings in industrial areas of cities and towns
and villages. They usually have loading docks to load and unload goods from
trucks. Sometimes warehouses are designed for the loading and unloading of
goods directly from railways, airports, or seaports. They often
have cranes and forklifts for moving goods, which are usually placed
on ISO standard pallets loaded into pallet racks. Stored goods can include any raw
materials, packing materials, spare parts, components, or finished goods
associated with agriculture, manufacturing and production.

Historically warehouses were a dominant part of the urban landscape used from
the start of the Industrial Revolution through the 19th century and into the
twentieth century: the building remained when their original usage had changed.
There are four identifiable types of warehouses. The cotton industry was co-
terminus with the development of the warehouse, and all five types were
represented in Manchester, United Kingdom. Warehouses in Manchester were
often lavishly decorated juxtaposing with the modern view of warehouses which
are assumed to be standard industrial buildings.
MEANING

We need different types of goods in our day-to-day life. We may buy some
of these items in bulk and store them in our house. Similarly, businessmen also
need a variety of goods for their use. Some of them may not be available all the
time. But, they need those items throughout the year without any break. Take the
example of a sugar factory. It needs sugarcane as raw material for production of
sugar. You know that sugarcane is produced during a particular period of the year.
Since sugar production takes place throughout the year, there is a need to supply
sugarcane continuously. But how is it possible? Here storage of sugarcane in
sufficient quantity is required. Again, after production of sugar it requires some
time for sale or distribution. Thus, the need for storage arises both for raw
material as well as finished products. Storage involves proper arrangement for
preserving goods from the time of their production or purchase till the actual use.
When this storage is done on a large scale and in a specified manner it is called
warehousing. The place where goods are kept is called warehouse. The person
in-charge of warehouse is called warehouse-keeper.
Warehousing refers to the activities involving storage of goods on a large-
scale in a systematic and orderly manner and making them available conveniently
when needed. In other words, warehousing means holding or preserving goods in
huge quantities from the time of their purchase or production till their actual use
or sale. Warehousing is one of the important auxiliaries to trade. It creates time
utility by bridging the time gap between production and consumption of goods.

Display of Goods for Sale

These displayed goods for the home trade. This would be finished goods-
such as the latest cotton blouses or fashion items. There street frontage was
impressive, so they took the styles of Italianate

Richard Cobden's construction in Mosley Street was the

first palazzo warehouse. There were already seven warehouses on Portland Street
when they commenced building the elaborate Watts Warehouse of 1855, but four
more were opened before it was finished. It was this type of warehouse that
inspired the Germans in Duesseldorf and Muenchen to name their prestigious
departmental stores, 'Warenhausen'.

Overseas Warehouses

These catered for the overseas trade. They became the meeting places for overseas
wholesale buyers where printed and plain could be discussed and ordered. Trade
in cloth in Manchester was conducted by many nationalities.

Behrens Warehouse is on the corner of Oxford Street and Portland Street. It was
built for Louis Behrens & Son by P Nunn in 1860. It is a four storey
predominantly red brick build with 23 bays along Portland Street and 9 along
Oxford Street. The Behrens family was prominent in banking and in the social life
of the German Community in Manchester.

Packing Warehouses
The main purpose of a packing warehouses was the picking, checking,
labeling and packing of goods for export. The packing warehouses: Asia
House, India House and Velvet House along Whitworth Street were some of the
tallest buildings of their time
Warehouse storage purpose is to provide provisions for easy access facilities. A
security system with closely monitored 24-hour CCTV surveillance, infrared
recording and on-ground security is provided for safety purposes. Climate control
facility is also catered for preserving required objects.

Railway Warehouses

Warehouses were built close to the major stations in railway hubs. The first
railway warehouse to be built was opposite the passenger platform at the terminus
of the Liverpool and Manchester Railway. There was an important group of
warehouses around London Road station (now Piccadilly station).In the 1890s
the Great Northern Railway Companys warehouse was completed on Deansgate:
this was the last major railway warehouse to be built.
Canal Warehouses

All these warehouse types can trace their origins back to the canal warehouses
which were used for trans-shipment and storage. Castle field warehouses are of
this type- and important as they were built at the terminus of the Bridgewater
Canal in 1761.

Storage and shipping systems

Some of the most common warehouse storage systems are:

Pallet racking including selective, drive-in, drive-thru, double-deep,

pushback, and gravity flow

Mezzanine including structural, roll formed, racks

Vertical Lift Modules

Horizontal Carousels

Vertical Carousels

A piece pick, also known as broken case pick, split-case pick, each pick, over-
pack or pick/pack, is a type of order selection process where product is picked and
handled in individual units and placed in an outer carton, tote or other container
before shipping. Catalog companies and internet retailers are examples of
predominantly piece-pick operations. Their customers rarely order in pallet or
case quantities; instead, they typically order just one or two pieces of one or two
items.

According to "PICK THIS!" several elements make up the piece-pick system.

They include the order, the picker, and the pick module, the pick area, handling
equipment, the container, the pick method used and the information technology
used.

Material direction and tracking in a warehouse can be coordinated by

a Warehouse Management System (WMS), a database driven computer
program.Logistics personnel use the WMS to improve warehouse efficiency by
directing pathways and to maintain accurate inventory by recording warehouse
transactions.

Automation and optimization

Automatic storage warehouse for small parts

Some warehouses are completely automated, and require only operators to work
and handle all the task. Pallets and product move on a system of
automated conveyors, cranes and automated storage and retrieval
systems coordinated by programmable logic
controllers and computers runninglogistics automation software. These systems
are often installed in refrigerated warehouses where temperatures are kept very
cold to keep product from spoiling, especially in electronics warehouse where
they require specific temperature to avoid damaging the parts, and also where
land is expensive, as automated storage systems can use vertical space efficiently.
These high-bay storage areas are often more than 10 meters (33 feet) high, with
some over 20 meters (65 feet) high. Automated storage systems can be built up to
40m high.

For a warehouse to function efficiently, the facility must be properly slotted.

Slotting addresses which storage medium a product is picked from (pallet
rack or carton flow), and how they are picked (pick-to-light, pick-to-voice, or
pick-to-paper). With a proper slotting plan, a warehouse can improve its inventory
rotation requirementssuch as first in, first out (FIFO) and last in, first out
(LIFO)control labor costs and increase productivity.

Modern trends
Aisle with pallets on storage racks

Traditional warehousing has declined since the last decades of the 20th
century, with the gradual introduction of Just In Time (JIT) techniques. The JIT
system promotes product delivery directly from suppliers to consumer without the
use of warehouses. However, with the gradual implementation ofoffshore
outsourcing and offshoring in about the same time period, the distance between
the manufacturer and the retailer (or the parts manufacturer and the industrial
plant) grew considerably in many domains, necessitating at least one warehouse
per country or per region in any typical supply chain for a given range of
products.

Recent retailing trends have led to the development of warehouse-style

retail stores. These high-ceiling buildings display retail goods on tall, heavy duty
industrial racks rather than conventional retail shelving. Typically, items ready for
sale are on the bottom of the racks, and crated or palletized inventory is in the
upper rack. Essentially, the same building serves as both warehouse and retail
store.

Another trend relates to Vendor Managed Inventory (VMI). This gives the
vendor the control to maintain the level of stock in the store. This method has its
own issue that the vendor gains access to the warehouse.
 Large exporters/manufacturers use warehouses as distribution points for
developing retail outlets in a particular region or country. This concept reduces
end cost to the consumer and enhances the production sale ratio.

Cross docking is a specialized type of distribution center (DC) in that little

or no inventory is stored and product is received, processed (if needed) and
shipped within a short timeframe. As in warehousing, there are different types of
cross docks.

Reverse logistics is another type of warehousing that has gained attention

in our "green-conscious" world. The term refers to items that are going from the
end user back to the distributor or manufacturer.

Cool warehouses and cold storage

Cold storage preserves agricultural products. Refrigerated storage helps in

eliminating sprouting, rotting and insect damage. Edible products are generally
not stored for more than one year. Several perishable products require a storage
temperature as low as -25C.

Cold storage helps stabilize market prices and evenly distribute goods both
on demand basis and time basis. The farmers get the opportunity of
producing cash crops to get remunerative prices. The consumers get the supply of
perishable commodities with lower fluctuation of prices.
 Ammonia and Freon compressors are commonly used in cold storage
warehouses to maintain the temperature. Ammonia refrigerant is cheaper, easily
available and has a high latent heat of evaporation but it is also highly toxic and
can form an explosive mixture when mixed with oil containing high percentage of
carbon. Insulation is also important, to reduce loss of cold and to keep different
sections of the warehouse at different temperatures.

There are two main types of refrigeration system used in cold storage
warehouses, a Vapour absorption system (VAS) and Vapour compression
system (VCS). VAS, although comparatively costlier, is quite economical in
operation and adequately compensates the higher initial investment.

The temperature necessary for preservation depends on the storage time

required and the type of product. In general, there are three groups of products,
foods that are alive (e.g. fruits and vegetables), foods that are no longer alive and
have been processed in some form (e.g. meat and fish products), and commodities
that benefit from storage at controlled temperature (e.g. beer, tobacco).

Location is a very critical aspect for the success of cold storage. It should
be in close proximity of a growing area as well as a market, be easily accessible
for heavy vehicles, and have uninterrupted power supply.

Cold storage and the law

There are state and local laws which regulate the cold store industry,
requiring safe working conditions for employees, and operational procedures must
be in accordance with these laws. Those companies which do their homework and
prepare in advance for inspections and other routine enforcement protocols will
be able to continue operating at full capacity, ensuring greater customer service
and more product flow seven days a week.

Refrigerated warehouse industry

 Refrigerated warehousing industries make up approximately one fifth of
the market size of general warehousing. Most of the market is concentrated in the
Midwest, but California has the largest market share of the states. In 2006, the
average market size of the industry was slightly over $3 billion, and the market
continued growing in the following half decade.

Internet impact

19th century warehouse in Frankfort,Kentucky, United States used to agebourbon

whiskey casks, seen closely through the warehouse windows

Internet-based stores do not require physical retail space, but still require
warehouses to store goods. This kind of warehouse fills many small orders
directly from end customers rather than fewer orders of many items from stores.
Having a large and complex supply chain containing many warehouse can be
costly. It may be beneficial for a company to have one large warehouse per
continent, typically located centrally to transportation. At these continental hubs,
goods may be customized for different countries. For example, goods get a price
ticket in the language of the destination country. Small, in-warehouse adjustments
to goods are called value added services.
NEED FOR WAREHOUSING

Warehousing is necessary due the following reasons.

(i) Seasonal Production- You know that agricultural commodities are
harvested during certain seasons, but their consumption or use takes place
throughout the year. Therefore, there is a need for proper storage or warehousing
for these commodities, from where they can be supplied as and when required.
(ii) Seasonal Demand- There are certain goods, which are demanded
seasonally, like woolen garments in winters or umbrellas in the rainy season. The
production of these goods takes place throughout the year to meet the seasonal
demand. So there is a need to store these goods in a warehouse to make them
available at the time of need.
(iii)Large-scale Production - In case of manufactured goods, now-a-days
production takes place to meet the existing as well as future demand of the
products. Manufacturers also produce goods in huge quantity to enjoy the benefits
of large-scale production,
which is more economical. So the finished products, which are produced on a
large scale, need to be stored properly till they are cleared by sales.
 (iv) Quick Supply - Both industrial as well as agricultural goods are
produced at some specific places but consumed throughout the country.
Therefore, it is essential to stock
these goods near the place of consumption, so that without making any delay
these goods are made available to the consumers at the time of their need.
(v) Continuous Production- Continuous production of goods in factories
requires adequate supply of raw materials. So there is a need to keep sufficient
quantity of stock of raw material in the warehouse to ensure continuous
production.
(vi) Price Stabilization- To maintain a reasonable level of the price of the
goods in the market there is a need to keep sufficient stock in the warehouses.
Scarcity in supply of goods may increase their price in the market. Again, excess
production and supply may also lead to fall in prices of the product. By
maintaining a balance of supply of goods, warehousing leads to price
stabilization.
TYPES OF WAREHOUSES
After getting an idea about the need for warehousing, let us identify the different
types of warehouses.
You have learnt that warehousing caters to the storage needs of different types of
commodities.
In order to meet their requirement various types of warehouses came into
existence, which
May be classified as follows.
i. Private Warehouses
ii. Public Warehouses
Iii. Government Warehouses
iv. Bonded Warehouses
v. Co-operative Warehouses

We shall now discuss each of these.

i. Private Warehouses - The warehouses which are owned and managed by
the manufacturers or traders to store, exclusively, their own stock of goods are
known as private warehouses. Generally these warehouses are constructed by the
farmers near their fields, by wholesalers and retailers near their business centres
and by manufacturers near their factories. The design and the facilities provided
therein are according to the nature of products to be stored.

ii. Public Warehouses - The warehouses which are run to store goods of
the general public are known as public warehouses. Any one can store his goods
in these warehouses on payment of rent. An individual, a partnership firm or a
company may own these warehouses. To start such warehouses a licence from the
government is required. The government also regulates the functions and
operations of these warehouses. Mostly these warehouses are used by
manufacturers, wholesalers, exporters, importers, government agencies, etc.

iii. Government Warehouses -These warehouses are owned, managed and

controlled by central or state governments or public corporations or local
authorities. Both government and private enterprises may use these warehouses to
store their goods. Central Warehousing Corporation of India, State Warehousing
Corporation and Food Corporation of India are examples of agencies maintaining
government warehouses.

iv. Bonded Warehouses - These warehouses are owned, managed and

controlled by government as well as private agencies. Private bonded warehouses
have to obtain licence from the government. Bonded warehouses are used to store
imported goods for which import duty is yet to be paid. Incase of imported goods
the importers are not allowed to take away the goods from the ports till such duty
is paid. These warehouses are generally owned by dock authorities and found near
the ports.
 v. Co-operative Warehouses - These warehouses are owned, managed and
controlled by co-operative societies. They provide warehousing facilities at the
most economical rates to the members of their society.
Characteristics of Ideal Warehouses
In the above section you have learnt about different types of warehouses. In each
of these warehouses adequate arrangements are made to keep the goods in proper
conditions.

However, any warehouse is said be an ideal warehouse if it possesses certain

characteristics, which are given below:
i. Warehouse should be located at a convenient place near highways,
railway stations, airports and seaports where goods can be loaded and unloaded
easily.
ii. Mechanical appliances should be there to loading and unloading the
goods. This reduces the wastages in handling and also minimises handling costs.
iii. Adequate space should be available inside the building to keep the
goods in proper order.
iv.Ware houses meant for preservation of perishable items like fruits,
vegetables, eggs and butter etc.should have cold storage facilities.

v. Proper arrangement should be there to protect the goods from sunlight,

rain, wind,dust, moisture and pests.

vi. Sufficient parking space should be there inside the premises to

facilitate easy and quick loading and unloading of goods.
vii. Round the clock security arrangement should be there to avoid theft of
goods.
viii. The building should be fitted with latest fire-fighting equipments to
avoid loss of goods due to fire.
Comparison of the 3 warehousing modes

To select the type of warehousing for your company, it is important to understand

the cost structure. The following table offers an excellent comparison on the
warehousing modes.

Public Warehouse
Private (Company) Pure Public
Contract Warehouse
Cost Component Warehouse Warehouse
Capital Cost l Building cost Not applicable Based on contracted
(depn) responsibilities for
l Facilities & eqm land, buildings, and
l Matl-handling eqm facilities
l (Un)loading
docks/rails

Expenses l Safety eqm Per unit cost based on As stated in the

l Insurance, taxes, the type of services contract
l Maintenance/ used
repairs
l Utilities
l Salaries/wages
l Employee benefits
Rates/ Fees Not applicable Time based: Storage Time and/or
charges transaction based, as
Transaction-based: stated in the contract
Handling charges;
in/out special
handling fees,
 documentation,
special services, etc
Risks The company assumed Defined and bear in Risks are assigned
all risks accordance with the and assumed as stated
standard terms and in the lease and/or
conditions of the contract
warehouse agreement

Table showing a Comparison of warehousing modes (capital cost, expenses, risks)

Functions of Warehouses
You have learnt that warehouses preserve goods on a large-scale in a systematic
and orderly manner. They provide protection to goods against heat, wind, storm,
moisture, etc. and also cut down losses due to spoilage, wastage etc. This is the
basic function of every warehouse. In addition to this, warehouses now a days
also perform a variety of other functions. In this section let us learn about the
various functions of warehouses. Warehouses perform the following functions
i.Storage of goods
ii. Protection of goods
iii. Risk bearing
iv. Financing
v. Processing
vi. Grading and branding
vii. Transportation
We shall now discuss each of these functions.
i. Storage of goods- The basic function of warehouses is to store large
stock of goods. These goods are stored from the time of their production or
purchase till their consumption or use.
ii. Protection of goods- A warehouse provides protection to goods from
loss or damage due to heat, dust, wind and moisture, etc. It makes special
arrangements for different products according to their nature. It cuts down losses
due to spoilage and wastage during storage.
iii. Risk bearing - Warehouses take over the risks incidental to storage of
goods. Once goods are handed over to the warehouse-keeper for storage, the
responsibility of these goods passes on to the warehouse-keeper. Thus, the risk of
loss or damage to goods in storage is borne by the warehouse keeper. Since it is
bound to return the goods in good condition, the warehouse becomes responsible
for any loss, theft or damage, etc. Thus, it takes all precautions to prevent any
mishap.
iv. Financing- When goods are deposited in any warehouse, the depositor
gets a receipt, which acts as a proof about the deposit of goods. The warehouses
can also issue a document in favour of the owner of the goods, which is called
warehouse-keepers warrant. This warrant is a document of title and can be
transferred by simple endorsement and delivery. So while the goods are in
custody of the warehouse-keeper, the businessmen can obtain loans from banks
and other financial institutions keeping this warrant as security. In some cases,
warehouses also give advances of money to the depositors for a short period
keeping their goods as security.
v. Processing - Certain commodities are not consumed in the form they are
produced. Processing is required to make them consumable. For example, paddy
is polished, timber is seasoned, and fruits are ripened, etc. Sometimes warehouses
also undertake these activities on behalf of the owners.
vi. Grading and branding- On request warehouses also perform the
functions of grading and branding of goods on behalf of the manufacturer,
wholesaler or the importer of goods. It also provides facilities for mixing,
blending and packaging of goods for the convenience of handling and sale.
vii. Transportation- In some cases warehouses provide transport
arrangement to the bulk depositors. It collects goods from the place of production
and also sends goods to the place of delivery on request of the depositors.
Advantages of Warehousing
Warehousing offers many advantages to the business community. Whether it is
industry or trade, it provides a number of benefits which are listed below.
i. Protection and Preservation of goods - Warehouse provides necessary
facilities to the businessmen for storing their goods when they are not required for
sale. It provides protection to the stocks ensures their safety and prevents wastage.
It minimizes losses from breakage, deterioration in quality, spoilage etc.
Warehouses usually adopt latest technologies to avoid losses, as far as possible.
ii. Regular flow of goods- Many commodities like rice, wheat etc. are
produced during a particular season but are consumed throughout the year.
Warehousing ensures regular supply of such seasonal commodities throughout the
year.
iii. Continuity in production- Warehouse enables the manufacturers to
carry on production continuously without bothering about the storage of raw
materials. It helps to provide seasonal raw material without any break, for
production of finished goods.
iv. Convenient location- Warehouses are generally located at convenient
places near road, rail or waterways to facilitate movement of goods. Convenient
location reduces the cost of transportation.
v. Easy handling- Modern warehouses are generally fitted with mechanical
appliances to handle the goods. Heavy and bulky goods can be loaded and
unloaded by using modern machines, which reduces cost of handling such goods.
Mechanical handling also minimizes wastage during loading and unloading.
vi. Useful for small businessmen- Construction of own warehouse requires
heavy capital investment, which small businessmen cannot afford. In this
situation, by paying a nominal amount as rent, they can preserve their raw
materials as well as finished products in public warehouses.
vii. Creation of employment - Warehouses create employment
opportunities both for skilled and unskilled workers in every part of the country. It
is a source of income for the people, to improve their standards of living.
 viii. Facilitates sale of goods- Various steps necessary for sale of goods
such as inspection of goods by the prospective buyers, grading, branding,
packaging and labeling can be carried on by the warehouses. Ownership of goods
can be easily transferred to the buyer by transferring the warehouse keepers
warrant.
ix. Availability of finance- Loans can be easily raised from banks and
other financial institutions against the security of the warehouse-keepers warrant.
In some cases warehouses also provide advance to the depositors of goods on
keeping the goods as security.
x. Reduces risk of loss - Goods in warehouses are well guarded and preserved.
The warehouses can economically employ security staff to avoid theft, use
insecticides for preservation and provide cold storage facility for perishable items.
They can install fire-fighting equipment to avoid fire. The goods stored can also
be insured for compensation in case of loss.
DISADVANTAGES

A) PUBLIC WAREHOUSE

There are some disadvantages relating to the contractual agreements between the
warehouse and the business lessee. When a lessee enters into an agreement, its
terms are rendered for a specific period of time. This can be unhandy, for the
business who has leased the space desired. Many public warehouse locations
make it more difficult to continue a level of satisfaction for customers services.
xxxxxxxxxxx Another disadvantage might be the fact that these warehouses are
operated by a 3rd party. If not properly monitored, an unsatisfactory method of
dealing with a business customers could become a detrimental aspect in relation
to its customers needs... Lack of communication is yet another negative factor of
public warehouses. This can be caused by technological devices, such as
computer systems, that are incompatible.

Another drawback of public warehouses is the lack of space available, especially

during the peak times of the year, such as holiday seasons, (Christmas). A
business that has contracted a public warehouse has very little influence over the
type or quality of business offered by this warehouse. The services, if lacking, can
have negative effects upon the business/customer relationship. The temperature
within the warehouse is another aspect to consider. Depending upon the product
being stored reveals the amount of concern needed. Very often the temperature,
within the public warehouse, is not sufficiently monitored. In relation to many
goods, this incorrect temperature can create a problem.

There is also the issue of transportation. If a public warehouse is not in a good

geographical location, then its use is a disadvantage for the lessee. This is an
important topic of concern in todays fast paced business world.

When the credentials and/ or references of a public warehouse are not thoroughly
investigated, then the experience can result in customer dissatisfaction or even a
loss of customers. It is crucial to check as to whether a warehouse is bonded
and insured. If this is not the case, then this public warehouse should not be used.
The reason that this is such a vital subject is due to the fact that if there is a
mishap like a fire, theft, flood, vandalist situation, etc, the products that are stored
can readily and / or easily be replaced without any additional expense for the
company leasing the space. This is probably one of the most important details to
remember when businesses acquire the services of public warehouses.

PRIVATE WAREHOUSE

a) Lack of flexibility:

The major drawback is it is too costly, because of its fixed size and costs. This
means that in the short run, the private facility cannot expand or contract to meet
increases or decreases in demand. Thus, when demand is low, the firm still
assumed the fixed costs as well as the lower productivity linked to unused
warehouse space. However, the disadvantages can be minimized if the firm is able
to rent out part of its space. Moreover, it loses flexibility in its strategic location
options. They cant change quickly to rapid changes in market size, location and
preferences, and this may mean that they will lose an excellent business
opportunity.

b) High opportunity cost (high risk)

ROI on other investments may be greater if funds are channeled into other profit-
generating opportunities. Besides, there is also a potential probability of not being
able to sell the w/h in the later period due to its customized design.

c) Low Rate of return:

Since the rate of return is about the same as the firms other investments, most
companies find it advantageous to use a combination of public and private
warehousing. It is best to use private warehousing to handle the basic inventory
levels required for the least cost logistics in markets where the volume justifies
ownership. On the other hand, any extra volume can be stored in the public
warehouse during peak periods where private warehouse is full.

d) High start-up cost:

Firms have to generate enough capital to build or buy a warehouse. A warehouse

is often a long, risky investment. Moreover, there is cost of hiring and training of
employees, and the purchase of material handling equipment. The high cost
involved may force the company to seriously consider public warehousing as a
better option.
BENEFITS OF WAREHOUSING

Warehouses enable storage of goods when their supply exceeds demand

and by releasing them when the demand is more than immediate
productions. This on one hand ensures a regular supply of goods in the
market and on the other hand it helps to stabilize prices by matching
supply with demand.

Warehouses provide for safe custody of goods. Businessmen can thus

minimize the risks to goods from loss,damage,fire,theft etc. Perishable
products can be preserved in cold storage. Also,the goods kept in a
warehouse are generally insured.

A warehouse provides facilities for processing, packing, blending,

grading etc, of the goods for the purpose of sale. The prospective buyers
can inspect the goods kept in a warehouse.

Warehouses provide a receipt to the owner of goods for the goods kept
in the warehouse. The owner can borrow money against the security of
goods by making an endorsement on the warehouse receipt. By keeping
the imported goods in a bonded warehouse, a businessman can pay
customs duty in installments.
GOVERNMENT AGENCIES

The Government has set up three agencies which are engaged in building large
scale storage/warehousing capacity :

1)Food Corporation of India (FCI)

The Food Corporation of India was setup under the Food Corporation Act 1964,
in order to fulfill following objectives of the Food Policy :

Effective price support operations for safeguarding the interests of the

farmers.
Distribution of foodgrains throughout the country for public distribution
system
Maintaining satisfactory level of operational and buffer stocks of
foodgrains to ensure National Food Security

In its 45 years of service to the nation, FCI has played a significant role in
India's success in transforming the crisis management oriented food security
into a stable security system. FCI's Objectives are:
 To provide farmers remunerative prices
To make food grains available at reasonable prices, particularly to
vulnerable section of the society
To maintain buffer stocks as measure of Food Security
To intervene in market for price stabilization

Headquarters

The Food Corporation of India was setup under the Food Corporation Act
1964 , in order to fulfill following objectives of the Food Policy:

Effective price support operations for safeguarding the interests of the

farmers.

Distribution of foodgrains throughout the country for public distribution

system.

Maintaining satisfactory level of operational and buffer stocks of

foodgrains to ensure National Food Security
Since its inception, FCI has played a significant role in India's success in
transforming the crisis management oriented food security into a stable security
system.

Statistics

It is one of the largest corporations in India and probably the largest supply
chain management in Asia. It operates through 5 zonal offices and 26 regional
offices. Each year, the Food Corporation of India purchases roughly 15-20 per
cent of India's wheat output and 12-15 per cent of its rice output. The purchases
are made from the farmers at the rates declared by the Govt. of India. This rate
is called as MSP (Minimum support Price). There is no limit for procurement in
terms of volume, any quantity can be procured by FCI provided the stock
satisfies FAQ (Fair Average Quality) specifications with respect to FCI.

Operation
The stocks are transported throughout India and issued to the State Government
nominees at the rates declared by the Govt of India for further distribution
under the Public Distribution System (PDS) for the consumption of the ration
card holders. (FCI itself does not directly distribute any stock under PDS and its
operations end at the exit of the stock from its depots). The difference between
the purchase price and sale price, along with internal costs, are reimbursed by
the Union Government in the form of Food Subsidy. At present the annual
subsidy is around $10 billion. FCI by itself is not a Decision making authority,
it does not decide anything about the MSP, Imports or Exports. It just
implements the decisions made by the Ministry of Food and Ministry of
Agriculture.its best

2)Central Warehousing Corporation (CWC)

Central Warehousing Corporation was established during 1957 to provide

logistics support to the agricultural sector. It is a public Warehouseoperator
offering logistics services to diverse group of clients. CWC operates 476
Warehouses across the country with a storage capacity of 10.18 million tonnes
providing warehousing services. These services includes foodgrain warehouses,
industrial warehousing, custom bonded warehouses, container freight stations,
inland clearance depots and aircargo complexes.

Apart from storage and handling, CWC offers services in the area of clearing &
forwarding, handling & transportation, procurement & distribution,
disinfestation services, fumigation services, consultancy services/ training for
the construction of warehousing infrastructure to different agencies and other
ancillary activities. CWC has 17 Regional Offices in the country.

It is a premier warehousing agency in India and is one of the biggest public

warehouse operators in the country offering logistics services to a diverse group
of clients. It is operating 490 Warehouses across the country with a storage
capacity of 9.8 million tonnes providing warehousing services for a wide range
of products ranging from agricultural produce to sophisticated industrial
products. Warehousing activities of CWC include foodgrain warehouses,
industrial warehousing, custom bonded warehouses, container freight stations,
inland clearance depots and aircargo complexes. Apart from storage and
handling, CWC also offers services in the area of clearing & forwarding,
handling & transportation, procurement & distribution, disinfestation services,
fumigation services and other ancillary activities. CWC also offers consultancy
services/ training for the construction of warehousing infrastructure to different
agencies.

Function

The Warehousing Corporation act, 1962:Subject to the provisions of this Act,

the Central Warehousing Corporation may--[3] *Acquire and build godowns and
warehouses at such suitable places in India as it thinks fit;

Run warehouses for the storage of agricultural produce, seeds, manures,

fertilizers, agricultural implements and notified commodities offered by
individuals, co-operative societies and other institutions;
 Arrange facilities for the transport of agricultural produce, seeds,
manures, fertilizers, agricultural implements and notified commodities to
and from warehouses;

Subscribe to the share capital of a State Warehousing Corporation;

Act as agent of the Government for the purposes of the purchase, sale,
storage and distribution of agricultural produce, seeds, manures, fertilizers,
agricultural implements and notified commodities; and

Carry out such other functions as may be prescribed.

The Warehousing Corporation (Amendment) Bill, 2011 has been proposed in

the Lok Sabha by the Ministry of Consumer Affairs, Food and Public
Distribution seeking to make Mini-Ratna company Central Warehousing
Corporation (CWC) an independent body without government being a
guarantor.

Operation

CWC operations include scientific storage and handling services for more than
400 commodities include Agricultural produce, Industrial raw-materials,
finished goods and variety of hygroscopic and perishable items.

Scientific Storage Facilities for commodities including hygroscopic and

perishable items through network of 476 warehouses in India with its 5,658
trained personnel.

Import and Export Warehousing facilities at its 36 Container Freight

Stations in ports and inland stations.

Bonded Warehousing facilities .

 Disinfestation services.

Handling, Transportation & Storage of ISO Containers.[5]

CWC enables the movement of imported and exportable goods to and from the
port towns and has developed infrastructure of Container Freight Stations &
Inland Clearance Depots throughout the country. It operates 36 CFSs/ ICDs
where composite services for containerised movement of import/export cargo
are provided. The Warehousing Corporation is empowered to acquire and build
Warehouses for storage of Agricultural produce, seeds, fertilizers and other
notified commodities and also to act as an agent of the Central Warehousing
Corporation or of the Government, for the purpose of purchases, sales storage,
distribution etc., of Agricultural Commodities in time of need.[6] Though it has
been criticised for lack of manpower and technologically equipped warehousing
facility.

3)State Warehousing Corporations (SWCs)

Warehousing corporations are also set up in different States of the country,like

Andhra Pradesh State Warehouse Corpoationr; Haryana Warehousing
Corporation, Kerala State Warehousing Corporation, etc. The area of operation
of the State Warehousing Corporations is centres of district importance. The
total share capital of the State Warehousing Corporations is contributed equally
by the concerned State Governments and the Central Warehousing Corporation.
The SWCs are under the dual control of the State Government and the Central
Warehousing Corporation.
Widest Network Of Warehouses Amongst All Indian States - 168 Centres With
about 800 Godowns.

Statutory Public Warehouse Keepers for Agricultural Produce Inputs & Stocks
in its Warehouses.

Warehousing Capacity Over One Million MT. i.e. 12,21,186 MT

FIFTY THREE Years Standing In Warehousing Business.

National Productivity Award Winner For The last 7 Years.

High Average Capacity Utilization - 89%.

Warehouse Receipts Accepted By All Banks As Security For Financing.

Warehousing Open To Individuals As Well As Organisations.

 Farmers, Scheduled Castes And Scheduled Tribes Given Rebate In
Warehousing Charges.

A Shining Example Of Highly Efficient & Profitable Public Sector

Undertaking.

Maharashtra State Warehouseing Corporation

Maharashtra State Warehousing Corporation was established on 8th August,1957,

under the Agriculture Produce (Development & Warehousing) Act,1956, which
was subsequently replaced by the Warehousing Corporations Act,1962. The
functioning of the State Warehousing Corporation is done on the basis of said Act
& the detailed procedure formultated under Bombay Warehouses Act,1959 and
Bombay Warehouses Rules,1960 duly amended from time to time.
As per the Act, MSWC has two Shareholders, one is Government of
Maharashtra and another is Central Warehousing Corporation with 50% Shares
each. Our Board of Directors consists of 5 Directors nominated by Government
of Maharashtra and 5 by CWC and Chairman & MD appointed by Government
of Maharashtra.

Maharashtra State Warehousing Corporation (MSWC) is one of the oldest State

Warehousing Corporation in the country, . It was started with 3 Warehousing
Centers and has now grown up to the extent of 165 Centers as at present with a
total capacity of 12.12 Lakhs M.Ts.

Maharashtra State Warehousing Corporation has introduced measures for

providing economical services to the farmers. to store their primary produce.
M.S.W.C. encourages to avail the facilities of scientific storage by giving rebate
up to 50% to them. Besides rebate up to 50% is also given to the farmers from
S.C./S.T. categories and notified tribal areas.
Warehousing activities of MSWC include scientific storage of food grains,
fertilizers, industrial goods , cotton bales, cement, and at some places it runs
custom bonded warehouses and container freight stations.

WAREHOUSE MANAGEMENT

Although it is possible for you to manage warehouse inventories using the

Inventory Management (IM) application component, the primary difference
between managing stock in WM and in IM is that in IM, the system can only
display the total stock of a material for storage Location. If a warehouse is small
and easily manageable, then the use of IM may be sufficient to fulfill your needs.
WM, on the other hand, offers the capability to manage stock quantities in each
individual storage bin in highly complex storage facilities. This means that, with
WM, you can optimize the use of all storage bins, mix pallets belonging to several
owners in randomly slotted warehouses and know exactly where a particular
material is located in the warehousing complex at all times.
Integration
The Warehouse Management application is fully integrated into the SAP R/3
system. Transactions that are initiated in other SAP components result in
corresponding tasks in WM which activate the actual physical transfers within the
warehouse.
A few of these activities include:
_ Material movements and changes in material status, such as releasing
goods from inspection
_ Material staging to production supply areas
_ Picking and shipping goods for sales orders

Most activities that take place within WM are initiated in Inventory Management.
For example, most goods receipts, goods issues and posting changes are initiated
in IM and subsequently processed in WM.
WM is also interfaced to Sales and Distribution (SD) through the Shipping
module to process delivery documents for both the integrated WM application and
the decentralized WM system.
The WM interface to Quality Management (QM) allows warehouse administrators
to track and manage inspection lots that are stored in the warehouse.
WM is also interfaced to the Production Planning (PP) system to assist in
providing materials to supply areas in production.
Features
WM provides several features that support warehousing activities. These include
the following:

Warehouse Structure
_ Management of complex warehousing facilities to include automatic
warehouses, custom designed storage areas, high rack storage, bulk storage, fixed
bin storage and all other commonly used storage areas
_ Definition and adaptation of a limitless variety of storage bins for use in your
specific warehousing complex

Goods Movements
_ processing of all relevant warehousing activities, such as goods receipts, goods
issues, deliveries, internal and external stock transfers, automatic replenishment of
fixed bins, material staging to production areas and stock difference handling
_ Utilization of random slotting for multiple owners of goods Strategies

_ processing of multiple goods movements with transfer requirements and

deliveries simultaneously
_ Storage and retrieval of hazardous materials and all other goods that require
special handling
_ Setup offorward pick areas and production supply areas with automated
replenishment from case or reserve storage when stock quantities reach a certain
threshold

Controlling
_ Optimization of capacity and material flow utilizing storage units in the
warehouse
_ monitoring and display of stocks on hand and summary evaluations of all goods
movements via warehouse controlling tasks

Inventory
_ Capability to maintain up-to-the-minute inventory records with the aid of stock
transfer confirmation
_ Archiving of records of all goods movements and inventory activity
With its inventory functions, WM ensures that book inventories in Inventory
Management match the stock in the warehouse at any time. Because SAP
components are fully integrated, you do not need separate interface programs
between IM and WM.

Printing Tasks
_ printing (of pallet slips, move orders, delivery slips, inventory documents, and
so on) is available for all relevant transactions
Although it is possible to print material documents for each separate transaction in
the warehouse, WM facilitates automatic flowthrough warehousing tasks that are
virtually paperless.

Interface to External Systems

_ Support for the use of bar code scanners, RF technology, AS/RS and automated
forklift systems for all stock movements through an automated ALE warehouse
control interface

Lean WM
_ This warehousing structure makes it possible to create transfer orders for
deliveries when no storage bins are managed in the system. For Lean WM, no
goods receipts or goods issues are processed as a subsequent process in WM. This
means that no bin data and no stock is updated at the storage bin level using
quants. Instead, this transaction takes place at the storage location level. It is used
primarily to handle pick orders for deliveries.

Warehouse Structure in the Warehouse Management System

Before you implement the application component Warehouse Management
(Warehouse Management System) you must first define the structure, that is, the
physical structure, of your warehouse or warehouse complex and depict it in the
system.

Warehouse Structure Without WMS

If you are not using the Warehouse Management System, the storage location is
the lowest level of inventory management in the system. In the Inventory
Management (IM) component, the storage location is defined as the location of
physical stock in a plant. In this case, storage ilocations make up the various
warehouse facilities (or areas) of a warehousing complex (for example, high rack
storage, picking area or bulk storage). However, you can only manage material
stock in a fixed bin warehouse. Random storage is not possible. This type of fixed
bin is different from a WMS storage bin in that it is entered into the material
master record at the storage location level.
If you are using Inventory Management without WMS, you can assign one or
several physical storage locations to each plant.

Warehouse Structure With WMS

When you implement the Warehouse Management System (WMS) in a plant, you
define the individual warehouses (high-rack storage, block storage, picking area,
and so on) as storage types within a warehouse complex and group them together
under a warehouse number. As a rule, it is not necessary to define several storage
locations for a plant since you assign the WMS warehouse number to a storage
location from Inventory Management (IM).
It is appropriate to define further storage locations for a plant if other warehouses
(storage types) exist within a plant that is not managed using WMS but with Lean
WM, for example. In WMS you define storage bins for each of the storage types.
In this way, WMS manages stock information on all materials in the warehouse at
storage bin level. In addition, the stock quantities of the material are managed in
Inventory Management (MM-IM) at storage location level. In order to link the
information at storage location level with the information from the storage bin,
assign a warehouse number to the storage location.

As a rule, it is a good idea to manage only the stocks of one storage location and
the same plant within a warehouse number. However, you can also manage
several storage locations of one and the same plant within a warehouse number.
Warehouse Number Definition
In Warehouse Management (WM), a complete physical warehouse is defined
under a single warehouse number. Using the warehouse number, you can manage
several individual warehouse buildings that, together, form a complete warehouse
complex.

Use
The warehouse number encompasses the organizational and physical aspects of a
warehousing complex as a single concept. For example, a unit of weight is
defined at the level of the warehouse number. Furthermore, at this level, the
system determines the standard unit of measure for WM documents, and special
interfaces, such as external interfaces or interfaces between Warehouse
Management (WM) and Production Planning and Control (PP), are defined here
as well. You can change these settings subsequently.
WAREHOUSE MANAGEMENT SYSTEM

A warehouse management system (WMS) is a key part of the supply chain

and primarily aims to control the movement and storage of materials within a
warehouse and process the associated transactions, including shipping, receiving,
putaway and picking. The systems also direct and optimize stock putaway based
on real-time information about the status of bin utilization. A WMS monitors the
progress of products through the warehouse. It involves the physical warehouse
infrastructure, tracking systems, and communication between product stations.[1]

More precisely, warehouse management involves the receipt, storage and

movement of goods, (normally finished goods), to intermediate storage locations
or to a final customer. In the multi-echelon model for distribution, there may be
multiple levels of warehouses. This includes a central warehouse, a regional
warehouses (serviced by the central warehouse) and potentially a retail
warehouses (serviced by the regional warehouses).
Warehouse management systems often utilize automatic identification and data
capture technology, such as barcode scanners, mobile computers, wireless LANs
and potentially radio-frequency identification (RFID) to efficiently monitor the
flow of products. Once data has been collected, there is either a batch
synchronization with, or a real-time wireless transmission to a central database.
The database can then provide useful reports about the status of goods in the
warehouse.

Warehouse design and process design within the warehouse (e.g. wave picking) is
also part of warehouse management. Warehouse management is an aspect of
logistics and supply chain management.

Objective

The objective of a warehouse management system is to provide a set of

computerized procedures for management of warehouse inventory with the goal
of maximizing cost and fulfillment times.

This includes:

The receipt of stock and returns into a warehouse facility. An efficient

warehouse management system helps companies cut expenses by
minimizing the amount of unnecessary parts and products in storage. It
also helps companies keep lost sales to a minimum by having enough
stock on hand to meet demand.[2]

Modeling and managing the logical representation of the physical storage

facilities (e.g. racking, etc.). For example, if certain products are often sold
together or are more popular than others, those products can be grouped
together or placed near the delivery area to speed up the process of
picking, packing and shipping to customers.
 Enabling a seamless link to order processing and logistics management in
order to pick, pack, and ship product out of the facility.

Tracking where products are stocked, which suppliers they come from,
and the length of time they are stored. By analysing such data, companies
can control inventory levels and maximize the use of warehouse space.
Furthermore, firms are more prepared for the demands and supplies of the
market, especially during special circumstances such as a peak season on a
particular month. Through the reports generated by the inventory
management software, firms are also able to gather important data that
may be put in a model for it to be analyzed.[3]

Types

Warehouse management systems can be standalone systems, or modules

of an ERP system or supply chain execution suite. Depending on the size and
sophistication of the organization, the system can be as simple as a handwritten
list that are updated when required, spreadsheets using software such as Microsoft
Excel or Access or purpose-built software programs.[4]

In its simplest form, the WMS can data track products during the production
process and act as an interpreter and message buffer between existing ERP and
WMS systems.

EVOLUTION

The evolution of warehouse management systems (WMS) is very similar

to that of many other software solutions. Initially a system to control movement
and storage of materials within a warehouse, the role of WMS is expanding to
including light manufacturing, transportation management, order management,
and complete accounting systems. To use the grandfather of operations-related
software, MRP, as a comparison, material requirements planning (MRP) started as
a system for planning raw material requirements in a manufacturing environment.
Soon MRP evolved into manufacturing resource planning (MRPII), which took
the basic MRP system and added scheduling and capacity planning logic.
Eventually MRPII evolved into enterprise resource planning (ERP), incorporating
all the MRPII functionality with full financials and customer and vendor
management functionality. Now, whether WMS evolving into a warehouse-
focused ERP system is a good thing or not is up to debate. What is clear is that the
expansion of the overlap in functionality between Warehouse Management
Systems, Enterprise Resource Planning, Distribution Requirements Planning,
Transportation Management Systems, Supply Chain Planning, Advanced Planning
and Scheduling, and Manufacturing Execution Systems will only increase the
level of confusion among companies looking for software solutions for their
operations.

Even though WMS continues to gain added functionality, the initial core
functionality of a WMS has not really changed. The primary purpose of a WMS is
to control the movement and storage of materials within an operation and process
the associated transactions. Directed picking, directed replenishment, and directed
putaway are the key to WMS. The detailed setup and processing within a WMS
can vary significantly from one software vendor to another, however the basic
logic will use a combination of item, location, quantity, unit of measure, and order
information to determine where to stock, where to pick, and in what sequence to
perform these operations.

At a bare minimum, a WMS should:

Have a flexible location system.

Utilize user-defined parameters to direct warehouse tasks and use live

documents to execute these tasks.

Have some built-in level of integration with data collection devices.

Do You Really Need WMS?

Not every warehouse needs a WMS. Certainly any warehouse could benefit from
some of the functionality but is the benefit great enough to justify the initial and
ongoing costs associated with WMS? Warehouse Management Systems are big,
complex, data intensive, applications. They tend to require a lot of initial setup, a
lot of system resources to run, and a lot of ongoing data management to continue
to run. Thats right, you need to "manage" your warehouse "management" system.
Often times, large operations will end up creating a new IS department with the
sole responsibility of managing the WMS.

The Claims:

WMS will reduce inventory!

WMS will reduce labor costs!

WMS will increase storage capacity!

WMS will increase customer service!

WMS will increase inventory accuracy!

The Reality:

The implementation of a WMS along with automated data collection will

likely give you increases in accuracy, reduction in labor costs (provided the labor
required to maintain the system is less than the labor saved on the warehouse
floor), and a greater ability to service the customer by reducing cycle times.
Expectations of inventory reduction and increased storage capacity are less likely.
While increased accuracy and efficiencies in the receiving process may reduce the
level of safety stock required, the impact of this reduction will likely be negligible
in comparison to overall inventory levels.The predominant factors that control
inventory levels are lot sizing, lead times, and demand variability. It is unlikely
that a WMS will have a significant impact on any of these factors. And while a
WMS certainly provides the tools for more organized storage which may result in
increased storage capacity, this improvement will be relative to just how sloppy
your pre-WMS processes were.

Beyond labor efficiencies, the determining factors in deciding to implement a

WMS tend to be more often associated with the need to do something to service
your customers that your current system does not support (or does not support
well) such as first-in-first-out, cross-docking, automated pick replenishment,
wave picking, lot tracking, yard management, automated data collection,
automated material handling equipment, etc.

WMS Setup

The setup requirements of WMS can be extensive. The characteristics of

each item and location must be maintained either at the detail level or by grouping
similar items and locations into categories. An example of item characteristics at
the detail level would include exact dimensions and weight of each item in each
unit of measure the item is stocked (eaches, cases, pallets, etc) as well as
information such as whether it can be mixed with other items in a location,
whether it is rackable, max stack height, max quantity per location, hazard
classifications, finished goods or raw material, fast versus slow mover, etc.
Although some operations will need to set up each item this way, most operations
will benefit by creating groups of similar products. For example, if you are a
distributor of music CDs you would create groups for single CDs, and double
CDs, maintaining the detailed dimension and weight information at the group
level and only needing to attach the group code to each item. You would likely
need to maintain detailed information on special items such as boxed sets or CDs
in special packaging. You would also create groups for the different types of
locations within your warehouse. An example would be to create three different
groups (P1, P2, P3) for the three different sized forward picking locations you use
for your CD picking. You then set up the quantity of single CDs that will fit in a
P1, P2, and P3 location, quantity of double CDs that fit in a P1, P2, P3 location
etc. You would likely also be setting up case quantities, and pallet quantities of
each CD group and quantities of cases and pallets per each reserve storage
location group.

If this sounds simple, it iswell sort of. In reality most operations have a much
more diverse product mix and will require much more system setup. And setting
up the physical characteristics of the product and locations is only part of the
picture. You have set up enough so that the system knows where a product can fit
and how many will fit in that location. You now need to set up the information
needed to let the system decide exactly which location to pick from, replenish
from/to, and putaway to, and in what sequence these events should occur
(remember WMS is all about directed movement). You do this by assigning
specific logic to the various combinations of item/order/quantity/location
information that will occur.

Below I have listed some of the logic used in determining actual locations and
sequences.

Location Sequence. This is the simplest logic; you simply define a flow
through your warehouse and assign a sequence number to each location. In
order picking this is used to sequence your picks to flow through the
warehouse, in putaway the logic would look for the first location in the
sequence in which the product would fit.

Zone Logic. By breaking down your storage locations into zones you can
direct picking, putaway, or replenishment to or from specific areas of your
warehouse. Since zone logic only designates an area, you will need to
combine this with some other type of logic to determine exact location
within the zone.
 Fixed Location. Logic uses predetermined fixed locations per item in
picking, putaway, and replenishment. Fixed locations are most often used
as the primary picking location in piece pick and case-pick operations,
however, they can also be used for secondary storage.

Random Location. Since computers cannot be truly random (nor would

you want them to be) the term random location is a little misleading.
Random locations generally refer to areas where products are not stored in
designated fixed locations. Like zone logic, you will need some additional
logic to determine exact locations.

First-in-first-out (FIFO). Directs picking from the oldest inventory first.

Last-in-first-out (LIFO). Opposite of FIFO. I didn't think there were any

real applications for this logic until a visitor to my site sent an email
describing their operation that distributes perishable goods domestically
and overseas. They use LIFO for their overseas customers (because of
longer in-transit times) and FIFO for their domestic customers.

Quantity or Unit-of-measure. Allows you to direct picking from different

locations of the same item based upon the quantity or unit-of-measured
ordered. For example, pick quantities less than 25 units would pick
directly from the primary picking location while quantities greater than 25
would pick from reserve storage locations.

Fewest Locations. This logic is used primarily for productivity. Pick-

from-fewest logic will use quantity information to determine least number
of locations needed to pick the entire pick quantity. Put-to-fewest logic
will attempt to direct putaway to the fewest number of locations needed to
stock the entire quantity. While this logic sounds great from a productivity
standpoint, it generally results in very poor space utilization. The pick-
from-fewest logic will leave small quantities of an item scattered all over
 your warehouse, and the put-to-fewest logic will ignore small and partially
used locations.

Pick-to-clear. Logic directs picking to the locations with the smallest

quantities on hand. This logic is great for space utilization.

Reserved Locations. This is used when you want to predetermine specific

locations to putaway to or pick from. An application for reserved locations
would be cross-docking, where you may specify certain quantities of an
inbound shipment be moved to specific outbound staging locations or
directly to an awaiting outbound trailer.

Nearest Location. Also called proximity picking/putaway, this logic looks

to the closest available location to that of the previous putaway or pick.
You need to look at the setup and test this type of logic to verify that it is
picking the shortest route and not the actual nearest location. Since the
shortest distance between two points is a straight line, this logic may pick
a location 30 feet away (thinking its closest) that requires the worker to
travel 200 feet up and down aisles to get to it while there was another
available location 50 feet away in the same aisle (50 is longer than 30).

Maximize Cube. Cube logic is found in most WMS systems however it is

seldom used. Cube logic basically uses unit dimensions to calculate cube
(cubic inches per unit) and then compares this to the cube capacity of the
location to determine how much will fit. Now if the units are capable of
being stacked into the location in a manner that fills every cubic inch of
space in the location, cube logic will work. Since this rarely happens in the
real world, cube logic tends to be impractical.

Consolidate. Looks to see if there is already a location with the same

product stored in it with available capacity. May also create additional
moves to consolidate like product stored in multiple locations.
 Lot Sequence. Used for picking or replenishment, this will use the lot
number or lot date to determine locations to pick from or replenish from.

Its very common to combine multiple logic methods to determine the best
location. For example you may chose to use pick-to-clear logic within first-in-
first-out logic when there are multiple locations with the same receipt date. You
also may change the logic based upon current workload. During busy periods you
may chose logic that optimizes productivity while during slower periods you
switch to logic that optimizes space utilization.