Warehousing – A Logistical Challenge

A warehouse acts as a supporting function for logistics and plays a key role in attaining the overall objectives of the firm’s logistical supply chain system. In today’s context, a warehouse is used as a switching facility rather than a long-term storage house. The attention is paid to higher inventory turnover, lower operating costs and shorter cycle times. The performance of a warehouse is judged by its productivity and cost performance, to achieve two polemic goals of customer satisfaction and lower cost of operation. Today, it is possible to redesign a warehouse using simulation models for maximum space utilization and increased material flow by automation to achieve productivity gains and cost reduction to fit into the overall objectives of the supply chain.

One of the most important steps in the selection of a logistics network is deciding on a central­ized or decentralized warehouse system. A warehouse can act as mother warehouse, or a distribution warehouse depending on the distribution system adopted by the company. The centralized ware­house ensures tight control on inventories and can operate on economies of scale resulting in lower operating cost. The decentralized warehouse operations with multiple distribution centres ensure the best services to the customers. The site section for locating the warehouse is the next step which depends on the type of product, consumption centres, transportation cost, customer service needs etc. Looking at the warehouse objectives of profit improvement through cost reduction and enhanc­ing customer service level for gaining a competitive edge, the following needs to be taken care of:

• Maximum utilization of storage space (floor and cubic space)
• Higher labour productivity
• Maximum assets utilization
• Reduce material handling
• Reduce operating cost
• Increased inventory turnover
• Reduced order filling time

The latest advancements in information technology and communication network play a vital role in bringing effectiveness and efficiency in warehousing systems through speedy information processing and internal and external connectivity. However, the degree of usage of the latest IT tools and communication systems depends on the management policy, product type, market competition and customer expectations. After all, the gains should justify the investment in the warehousing system. Hence, designing a proper warehousing system is not a simple task looking at the variables which are to be balanced to get the best performance on the cost and customer service fronts.

WAREHOUSING PRACTICES

1. Public Warehousing

The Central Warehousing Corporation (CWC), a Government of India undertaking and the largest public warehousing company in India, was set up in 1957, under the Warehousing Corporation Act. The main objective of CWC is to provide scientific storage facilities for agricultural inputs and produce and other notified commodities. Presently CWC runs 467 warehouses spread across the country, having a total storage capacity of 8.56 million tonnes including 111 customs bonded warehouses with a capacity of 0.75 million tonnes to cater to the needs of importers and exporters. Apart from the facts mentioned above, CWC along with its 16 state subsidiaries accounts for 11.39 million tonnes of storage capacity spread across more than 1400 warehouses. CWC runs a number of cold storage facilities at strategic locations for perishable cargo and maintains liquid cargo warehouses at major Indian ports. The aver­age storage capacity utilization at CWC is 74 per cent. CWC operates 30 container freight stations and inland container depots and plays a major role in multi-modal transportation in the country.

Source: http://www.fieo.com/cwc

2. Stored Cold and Fresh

Snowman Frozen Food Ltd., a joint venture between Gateway District Park and Mitsubishi group, oper­ates a chain of cold storage facilities in India for marine products, processed food products and fruits. Each of their cold storage facilities, built at a cost of INR 3.5 crores each, has a storage capacity of more than 1000 MT and is equipped with ultra modern storage and material handling facility. They operate chillers at 2°C and freezers at -18° to -20°C for different product applications.

3. Bulk Liquid Cargo Storage

IMC Ltd., is the country’s largest third-party liquid storage facility service provider in private sector. They have expertise in the storage of hazardous liquid cargo such as petroleum and petrochemical prod­ucts having flash points between 23 and 93°C. They also provide storage facilities for liquefied gases and edible oils. These facilities are located at 12 major seaports in India with a total storage capacity of 6,80,000 cubic meters built along 210 storage tanks as per the stringent DIN and ISO standards for storage of hazardous petroleum products. They offer value-added services such as complete automation in loading and unloading of the cargo, Saab Tank Radar Gauges for automating monitoring of tank parameters, and provisions for safety, health and environmental protections. They are also storage partners to leading names such as Caltex, ESSO, Exxon, elf, Cargill etc. for the past 35 years.

Source: http://www. theimcgroup.com

4. Document Warehousing

Softage Information Technology Ltd., New Delhi, is a third-party service provider that offers documenta­tion management solution to business corporations in India. The documents may be in the form of physi­cal or digital media. They have a state-of-the-art warehousing facility to scientifically store, handle and retrieve business documents that otherwise business firms find difficult to pay attention to, as this is neither their core concern nor have they any expertise in preserving documents. The company has dedicated ware­houses and a fleet of specially designed vehicles to transport documents from clients place to their ware­house and vice-versa. They ensure delivery of any preserved document to the client within shortest possible time. Their customer base covers leading banks, corporate business houses and insurance companies.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.