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Warehouse & Inventory Management

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Presented By M.Amir Sohail

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“Storage or warehousing provides the place utility as part of logistics for any business and along with Transportation is a critical component of customer service standards”.

Warehousing:-

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Reasons for warehousing:-To support the company’s customer policy.

To maintain a source of supply without interruptions.

To achieve transportation economies.

To support changing market conditions and sudden changes in demand.

To support any JIT programs.

To provide customers with the right mix of products at all times and all locations.

To ensure least logistics cost for a desired level of customer service.

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Warehouse Operating Principles:

Three Principles are:

1) Design criteria:

a) Number of stories in the facility,

b) Height utilization,

c) Product flow

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Warehouse Operating Principles:-

2) Handling technology

a) Movement continuity,b) Movement scale economies.

3) Storage plan

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• Receive goods

• Identify goods

• Dispatch goods to storage

• Hold goods

• Pick goods

• Dispatch the shipment

• Operate an information system

Warehouse Activities

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Types of warehouses:-

It includes:

1) Private warehouses,

2) Public warehouses, 3) Contract warehouses

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The Warehouse location strategies:-1) Market positioned:

a) Order Cycle timeb) Transportation costc) Sensitivity of the productd) Order sizes

2) Product positioned:a) Perishability of the raw materialsb) Number of products in the product mixc) Assortments ordered by the customers from the product mixd) Transportation consolidation rates

3) Intermediately positioned:

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Benefits of warehousing:-

Consolidation.

Break bulk warehouse.

Processing / Postponement.

Stockpiling.

Service benefits

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Warehousing Strategy

Other qualitative factors that should be considered include:

1) presence synergies: Inventory located nearby in a building that is clearly affiliated with the enterprise.

2) industry synergies: Refer to the operating benefits of collocating with other firms serving the same industry.

3) operating flexibility: Refers to the ability to adjust internal policies and procedures to meet product and customer needs.

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4) location flexibility: Refers to the ability to quickly adjust warehouse location and number in accordance with seasonal or permanent demand changes.

5) scale economies: Refer to the ability to reduce material-handling and storage through application of advanced technologies.

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INVENTORY MANAGEMENT

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Definitions: Inventory-

A physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state.

Inventory System- A set of policies and controls that monitors levels of

inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be

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Functions of Inventory1. To separate various parts of the production process

2. To decouple the firm from fluctuations in demand and

provide a stock of goods that will provide a selection for

customers

3. To take advantage of quantity discounts

4. To hedge against inflation

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Types of Inventory Raw material

Purchased but not processed Work-in-process

Undergone some change but not completed A function of cycle time for a product

Maintenance/repair/operating (MRO) Necessary to keep machinery and processes productive

Finished goods Completed product awaiting shipment

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The Material Flow Cycle

Input Wait for Wait to Move Wait in queue Setup Run Outputinspection be moved time for operator time time

Cycle time

95% 5%

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Inventory Management

How inventory items can be classified?

How accurate inventory records can be maintained?

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• Improve customer service

• Transportation savings

• Hedge against future

• Unplanned shocks (labor strikes, natural disasters, surges

in demand, etc.)

• To maintain independence of supply chain

Why hold inventory?

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Dead stock

Anticipation inventory

Cycle stock Safety stock

Pipeline stock

Decoupling stock

Categories of Inventory

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1. Cycle Stock : Because of the economies of scale involved in production and

transportation it makes sense to produce and transport goods in

batches. The is called as cycle stock. 2. Safety stock : It is a safeguard against the uncertainties of demand and supply.

3.Pipe line stock: Since production and transportation activities take certain finite time, firms need to carry pipeline or in transit stock. Pipeline stock consist of good usually being worked upon (WIP) or being moved from one location to another in the chain ( In transit Inventory).

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4. Decoupling Stock:

Since it is not possible to carry out supply chain operation with just one decision maker, the entire supply chain is usually divided into various decision making unit, the demarcation of decision making unit take place at both organizational and departmental boundaries, so it is not uncommon for organizational to hold large inventories at organizational as well as departmental level. This becomes decoupling inventories. So that flexibility at each level can be made

5. Dead Stock:

It refers to that part of the stock , that remain dormant or non moved over a long period of time .

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6. Anticipation Stock : It consist of stock accumulated in advance of expected peak in sales or to take care of some special event that does not occur on regular basis.

It is of two types1. Seasonal Stock2. Speculation Stock

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Distribution of presentation Name Slide No Roll # NO Sohail Nadeem 3,4,5,6 15 M. Amir Sohail 7,8,9 59 Sirfraz Riaz 10,11,12 45 Asim Iqbal 13,14,15 199 M.Zeshan 16,17 135 Malik Shahbaz 18,19 69 M.Waqas Tariq 20,21,22 123 M.Zahid 23,24 43 Note : Please preparation every one own slide and

Number don change at the time of presentation