1. Supply Chain Management Principles
LB 3: Warehousing Operations Overview

2. LB Objectives Understand the difference between a Warehouse and a DC
Communicate the characteristics of a Warehouse and a DC
Articulate the key operations of a Warehouse (e.g. receiving, storage, product placement, filling orders, and order-picking-process)
Review the key shipment documents
LO1

3. Warehouses
Warehouses and DC’s are the link between incoming products from suppliers & manufacturing on one side and manufacturing & customers on the other
Warehouses are used to process and store goods and materials purchased from suppliers.
Warehouses are used to store products that have been assembled and manufactured to fill customer orders.
LO2

4. Warehouses Serve as the interim staging location for purchased goods
Provides availability for production and manufacturing to produce at efficient levels
They store products to satisfy customer demand and are also used for:
Receiving goods, Storage, Retrieval, & Preparation for shipment
When value-added services are performed at a warehouse, the basic warehouse can be transformed into a DC or Fulfillment Center
LO1

5. Warehouse Value-Added Services
Cross-docking – When incoming goods are immediately prepared for outbound shipment so that no storage is required.
Cross-docking may involve sorting materials intended for different destinations or to combine materials from different origins into vehicles with the same or similar destinations
Marking & Labeling – Done to satisfy unique customer request for product identification
Light final product assembly – Combining products to meet specific customer requirement
LO1

6. Warehouses
Warehouses can efficiently store products for varying periods of time.
Manufacturers use warehouses to store products
They are sometimes located next to a manufacturing facility
Importers direct products to seaport warehouses
Warehouses are located in small and large cities (often in a concentrated central location)
LO2

7. Warehouses Warehouses use sophisticated technology such as: Barcodes
Automated storage and retrieving systems
Inventory management computer systems
Many warehouses operate on JIT (Just-In-Time)
Warehouses may store equipment, raw materials, excess or obsolete inventory, and inventory that is work-in-process
Automated technology includes: Conveyor Belts, & Programmable Robot Devices that move products
LO2

8. Distribution Centers (DC’s)
DC’s house products that are redistributed to wholesalers, retailers, or directly to consumers
A DC is the principal part, or order processing element, of the order fulfillment process
Retail DC – Distributes goods to retail stores
Order Fulfillment Center – Distributes goods directly to consumers
Cross-dock – Stores few or no products
LO3

9. Warehouse Management System (WMS)
WMS’s manage entire operations of warehouses and DCs
WMS’s control the Receiving, Movement, Storage, and Retrieval of products
WMS’s provide real-time information on status or warehouse space utilization and product turnover
WMS’s manage communication among receiving, storage and shipping
Technology used for efficiency includes: barcode scanners, wireless handheld systems, pick-to-voice, pick-by-light, mobile computers, RFID (Radio-frequency-identification) tags
LO1

10. WMS
WMS is a large database of information that generates status reports such as product location, number of units available, number received and shipped in a given time period
LO5

11. The Receiving Process 1 – Time and date for unloading is scheduled
2 – Product is moved from vehicles into warehouses
3 – Trailers are successfully backed into unloading bays
4 – Shipping paperwork is transferred and products are inspected for damage
5 – During unloading, products are counted, labeled, and sent for storage
6 – Discrepancies must be noted
7 – Some products are shipped immediately, others are stored in warehouses
LO5

12. Common Equipment & Technology
Dock plates, Dock levelers, Dock seals, Wheel chokes
They help secure trailers in place and provide bridges for forklift and other heavy equipment to unload a trailer
Pallet jacks and forklifts are used to unload palletized products
Wooden pallets are cheaper than plastic pallets but they are not as durable
Wooden pallets break easily, create a mess, is a safety hazard with splinters, and can harbor insects and rodents

13. Pallets & License Plates
License plate barcode labels are commonly found on pallets
WMS generates barcode labels that are placed on pallets
Pallets can be instantly identified using a barcode scanner
RFID tags are small and can be placed anywhere on pallets
RFID tags are expensive, but expected to become the method of choice in the future

14. Paperwork and Inspection in Receiving
A packing list is required for all commercial shipments. It lists the following contents for containers:
Items included
Item codes or Stock Keeping Units (SKU’s)
Description of the items
Quantity
Any additional information about the items

15. Paperwork
Bill of lading is a contract document from shippers that confirms that items have been delivered to the appropriate recipient. It is used for the following:
Record and track dispatch
Record weight of each load
Inspection and verification are the final step in receiving. We inspect for:
Visible signs of damage such as crushed packages, torn or broken cartons / containers.
We also confirm quantity against the packing list, bill of lading, and original purchase orders.

16. The Storage Process
Storage involves putting products away in specific, clean, and secure locations for easy retrieval
Proper storage takes time and money
Proper storage saves employees valuable time in finding specific items throughout the warehouse to fill customer’s orders

17. Strategies for Storage
Minimal Handling is the most efficient management practice in warehouses
Handling costs may increase due to:
Extra time and labor needed
Possibility of damaging the products
Possibility that the products may be misplaced
Possibility of re-storing the product in a different location than originally assigned through the WMS
Product Demand – High demand items may go directly to outbound shipping areas and may never be stored. Items that move slowly will be stored in a remote area

18. Strategies for Storage
Storage Racking – Common warehouse strategy that provides a unique number to each rack as well as a row number for each row within a rack
Rack numbering allows everyone to know where products are located within the warehouse
Rack numbering creates a safe, organized, and clean workspace while providing protection for products
Racks make good use of overhead space
Racks can go up to 8 pallets high
Bins and Containers – Used for items stored in configurations smaller than pallets

19. Labeling and Storage Location
Storage labels are generated at receiving bays by the WMS upon receipt of the product
They are also known as Location labeling or License plates
Effective labeling systems reduces picking errors, saves time in finding items, and facilitates more accurate inventory management

20. The Order Process Orders usually provide the following information:
The order fulfillment process starts when customers place an order
Orders come from retail stores, other DC’s, manufacturing organizations or directly from end users
Orders usually provide the following information:
Part or item number
Quantity
Color
Unique attributes
Delivery date
When orders are received, a pick list is generated and the order fulfillment process is initiated

21. Order Picking
Order picking refers to picking items from their storage to complete an order
The goal of order picking is efficiency through speed to delivery, reducing waste, and lowering cost
WMS systems include handheld barcode readers or scanners
Inventory is also maintained using the WMS

22. Distinctive Picking Types
Manual Picking – Most basic method of picking. Order pickers manually pick one item from storage and bring it back to the staging area
Order Picking – Items are picked individually for an entire order using a cart, basket, or pallet
Batch Picking – Pickers pick items for several different orders, improving picking efficiency and accuracy
Zone Picking – Warehouses are divided into zones so that pickers are assigned to a specific zone to fulfill orders

23. Distinctive Picking Types
Voice-Picking – Similar to GPS in cars, voice-pickers follow directions they receive in their headsets
Benefit includes faster picking times and reduced picking errors
Pick-by-light systems – Beneficial for quick and accurate selection. Digital display in warehouses tell the picker where the items to be shipped are located
The pickers turn off the switch after completing their order

24. Preparation for Shipment
The last step in the order fulfillment process is preparation for shipment
We have our final opportunity to correct any order issues and verify order fulfillment accuracy
Personnel should be aware of carrier packing/packaging requirements and should keep the following in mind:
The size of the order
The modes and methods of transportation (Vast majority of goods are transported in trucks with rail second, air being the least used)
The carriers’ shipping requirements (airbags for certain items?)
The need for refrigeration of safeguards for hazardous materials

25. Safety, Cleanliness, Stating, Loading, and Transporting
Staging area is where products unloaded off the truck and are loaded into trucks
The staging area is the most dangerous area of the warehouse and DC and safety is absolutely critical
It is dangerous because:
Workers move rapidly throughout the area
Lighting may be poor or inconsistent due to sun blindness
Forklifts rush back and forth
Large trailers back in and out
Trailers butt up against buildings
Environment is hot, noisy, crowded, and busy

26. Tidying up - Trucks
Large palletized orders are shrink wrapped to prevent their contents from spilling inside the truck
Protective padding is added inside the truck if needed
Refrigerated or frozen trucks are used as needed
Many warehouses wrap pallets before loading using hand or automated application

27. Shipping Documentation
Bill of Lading – The most important document to ship an item. It is given to carriers before departure. It is a contract that signifies acceptance of goods by the carrier to be delivered to a specific receiver
Shipping/packing list, Shipping Manifest and Waybill – Shows itemized detail with complete history of loads. Usually does not include cost or pricing. They provide more detail about the product specifics than a bill of lading for shipper and receiver
Tracking – Allows user to know exact status and location. A unique tracking number is assigned