Warehouse Management: Functions, Activities, and Logistics

Logistics System & Warehouse Functions

  • Logistics involves the positioning of resources, encompassing movement not limited to goods but also people.
  • Air transportation specifically focuses on the movement of people and goods by air.
  • Warehousing in the logistics system:
    • Raw material warehouse: Stores materials from suppliers to feed production.
    • Finished goods warehouse: Stores finished products after production, before distribution.

Warehouse Processes

  • Basic warehouse processes:
    • Receiving
    • Storage
    • Inventory
    • Issuing
    • Shipment
  • Warehouse organization is structured based on these processes, with dedicated units for each function (receiving, storage, inventory management, etc.).
  • Warehouse management is responsible for overseeing all these processes.

Warehouse Definition & Basic Functions

  • Definition: A place for receiving, storage, issuing, and distribution of raw materials and goods.
  • Basic functions:
    • Receiving finished products, raw materials, components, etc.
    • Storage and control of items.
    • Sorting and/or break bulk for distribution.

Types of Items Stocked

  • Common items stored in warehouses:
    • Raw materials
    • Components and attachments
    • Packaging materials
    • Spare parts
    • Work in progress
    • Finished goods
    • Maintenance equipment
  • Work in progress refers to items that have been started but not yet finished.

Range, Value, and Complexity of Items

  • The range, value, and complexity of items stored depend on the size and complexity of warehouse operations.
  • Complex operations (e.g., aircraft maintenance) involve a wide range of complex, high-value items.
  • Simple operations (e.g., trading) involve a narrow range of less complex items.

Operations & Materials Stored

  • Production operation: stores raw materials, components, work in progress, and packaging materials to support production.
  • Distribution operation: stores finished goods and sales support materials to support sales.
  • Engineering functions: stores spare parts, equipment, and attachments to support engineering operations.

Responsibilities of Warehouse Management

  • Economy
  • Stock control
  • Stock record
  • Stock take and inspection (essential for closing of accounts to capture the asset; done at least once a year)
  • Storage of stock
  • Identification
  • Issuing
  • Inspection
  • Safety and security
  • Material handling
  • Receipt of stock

Warehouse Organization Guidelines

  • Written guidelines covering warehouse policies, procedures, and organization must be issued to clearly define the limits of functions and actions.
  • These guidelines are crucial due to the high value of goods stored in the warehouse.
  • Warehouse is like a bank, dealing with physical items/goods of high value
  • Guidelines should include job descriptions and operational procedures for warehouse staff.

Warehouse Structure & Operations

  • Large warehouses may have these specific units:
    • Identification unit: for identifying items.
    • Standards unit: to ensure conformance to specifications.
    • Stockyard unit: to handle items stored in the open (store yard is an open space for storing items that can be exposed to weather; function is the same as warehouse but warehouse is a building).
    • Stock control unit: part of inventory management.
    • Record unit.
    • Accounting unit.
  • Warehouse activities provide services to other departments and are closely related to marketing or sales functions (distribution warehouse).
  • Effectiveness of warehouse functions directly impacts sales and production.

Relations with Other Departments

  • Production:
    • Warehouse supports production by ensuring the availability of required materials.
    • Accurate feedback from production, including production plans, is critical for warehouse preparation regarding raw materials.
  • Distribution:
    • Warehouse supports distribution (finished goods warehouse) by controlling finished goods.
    • Warehouse needs to ensure the correct stock in the right quantity is ready for distribution.
    • Distribution needs to provide up-to-date information on distribution system requirements and sales forecasts.
  • Engineering:
    • Warehouse supports engineering functions by storing spare parts and equipment.
    • Maintenance schedules help ensure the availability of the required items.
  • Quality Control (QC):
    • QC maintains standards for materials used or produced.
    • Warehouse prepares all items to be received for inspection and approval by QC.
    • A system must inform QC about goods delivery.
  • Purchasing:
    • The relationship between purchasing and warehouse is close in terms of activities.
    • Purchasing needs warehouse information on stock levels at all times.
  • Marketing:
    • Warehouse ensures all stock for sale or use is correctly issued and under control.
    • Sales personnel depend on the warehouse to ensure the availability of normal stock and promotional items.
    • Warehouse must be sensitive to future sales and enable planning on stock, storage space, and workers.
  • Maintenance:
    • Warehouse must ensure all required materials, equipment, spares, and attachments are available at all times.
    • Warehouse must be sensitive to the short-term and long-term maintenance plan.
  • Accounting:
    • Accounting needs information from the warehouse on stock and damaged stock for balance sheet listing (asset capture).
    • Accounting also frequently needs to confirm goods receipts for payment processing.
    • The warehouse must prepare data on stock used for accounting to prepare cost allocation.

Key Takeaways

  • The responsibilities of warehouse management are (plan, organize, lead, control).
  • Warehouse (storage of goods which equals high value money) has to be integrated with processes and stakeholders.