1. Material Storage Function
The primary task of a warehouse is to store any material until it has been delivered to the customer or the end user. As the manufacturing and consumption cycle never match, the manufactured material has to be stored somewhere till the demand for the same is generated and the delivery is confirmed. In fact, the storage facilities are designed around the following four functions.
Hold. The holding (Figure 4.1) function is the most important function of a warehouse for the finished products ready for delivery. Depending on the demand or order booking pattern and the delivery schedules promised to the customer by the marketing department, the goods are dispatched from the warehouse. At the warehouse there is a continuous inflow and outflow of material. A proper record of the material, which gets in and out, has to be maintained to know the inventory levels at any point of time. The allocation of area for materials at different points of time is necessary to retrieve those materials as and when required for further delivery to particular customers or markets. Hence, the material-holding function has to be carefully planned looking at variables such as product categories, product mix, product characteristics, shipment arrival time, expiry dates, etc.
Consolidation. If the supplies are originating from various sources in small quantities, it may be economical to collect these small shipments at one centre and combine them into a large shipment for sending it to the customer. The consolidation (Figure 4.2) will ensure cost saving on freight.
For import or export of goods for large buyers whose requirement does not warrant for enough volumes for shipment from each source, there is potential cost saving on the freight with consolidated shipment. In such cases planning a warehouse for shipment consolidation may be a better proposition. The cost savings will offset the cost of setting up a place for consolidation.
Break Bulk. In contrast to the consolidation warehouse, here the material arriving in bulk is divided into small shipments for delivering it to the end customer. The bulk cargo of fertilizers, oil, chemicals coming form a source is broken (Figure 4.3) into small consignments for buyers as per their requirement.
Normally the distribution warehouses of manufacturing firms have break bulk as the common activity. The firm saves substantially on freight by dispatching the shipment in bulk to its regional distribution centres, where it is divided into small packets and dispatched to the end user as per the demand.
Cross-Docking. This is similar to break-bulk activity except that it involves multiple suppliers. The usage of a warehouse is for very short time. The material arriving in bulk in fully loaded trucks is broken into smaller consignments for further dispatch to the customers. The stay of material in the warehouse is not more than 48 hours. Cross-docking is most commonly used in retail chains wherein the mother warehouse receives different materials from multiple suppliers, which is broken, assorted and consolidated for dispatch to various retail stores as per the requirements.
Mixing. A warehouse sometimes is used as a product mixing point (Figure 4.4) for a company having a number of plants manufacturing different ingredients, which are mixed at a convenient place to make final products.
The process involved is a simple mixing. The customer order can be fulfilled without mixing, by sending the ingredients in small uneconomical volumes from individual plants to the customer. However, the transportation cost becomes prohibitive, for shipments of individual ingredients to the customer. A common mixing point permits volume shipments of ingredients at a single location. These shipments are then assembled into an order and dispatched to the customer in sizable lots to economize on transportation cost.
Postponement. With postponement the anticipated risk of maintenance of the finished goods inventory is reduced considerably. The parts and components are warehoused at strategic locations. The final assembly is kept on hold till the customer places or modifies the order. The strategic suppliers in the supply chains are asked to postpone the delivery of parts till other critical items required for assembly arrive in the manufacturing plant. Thus, the postponement function of a warehouse reduces the risk of finished goods inventory and space blockage.
Packing. This is an important function that is carried out in a warehouse after the break-bulk operations. The repackaging of the material as per the ordered quantities of the individual customer is done. The packs are labelled and marked as per the packaging regulations or as per requirements of the customer.
2. Material Handling Function
This function is divided into the following three activities:
Loading and Unloading. The unloading activity is performed when the goods arrive in a warehouse. The material is offloaded from the transportation vehicle. Loading is the last function performed in a warehouse. The material packed in boxes is loaded on to the transportation vehicle at the loading area. Loading includes the additional efforts of bracing the load to prevent the damages.
Material Movement (To and From the Storage Area). These activities are carried out either manually or with the help of the material handling equipment. The incoming material that is unloaded has to be moved to an assigned place in a warehouse for temporary storage, while during order pickup the material is to be moved from the storage to the packing area and then to the loading area. For material movement, the most common equipment in use are trolley, crane, conveyor or forklift.
Order Filling. The final material handling activity is order filling. This includes the selection of material from various lots at various locations in a warehouse as per the customer order. This activity is done manually or with the help of robots. The order cycle time, which is the most critical parameter in customer service, is very much dependent on the speed of material picking.
3. Information Handling Function
For an effective and efficient customer service, it is essential for the marketing persons to know the availability of stocks and the likely dispatch schedule. Also the inventory level at any point of time is of crucial importance to the top management to know its impact on cash flow of the firm. This is possible with a proper warehouse information system. Information is also required on the following:
- Goods inwards
- Inspection and auditing
- Goods outwards
- Stock outs
- Excess stocks
- Warehouse expenses
- Transit damages and breakages
- Consignment tracking
Information is the power and it helps in taking a speedy decision in a highly competitive environment for building a competitive edge over the rival. Hence, a proper warehouse information system can considerably enhance the quality of customer service to both internal and external customers of the organization leading to customer satisfaction.
Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.