Introduction

Warehousing plays an important role in logistic management that can be

decisive to the success or downfall of a business. Therefore, managing storage
function is important to ensure smooth supply and to maintain or increase customer
level. Warehouses are commercial building for the purpose of storage of goods. They
are used in manufacturing companies, wholesalers, importers, exporters, and mostly
all the businesses. Usually they are large buildings in industrial area of cities and
towns. Warehouses are an integral part of the supply chain infrastructure where they
are actively involved to feed the demand of inbound and outbound of supply chain.
Warehouses should perhaps be better thought of as undertaking sorting and not
storing products. Warehouses are planned space for the storage and handling of
goods and materials with the appropriate equipment equipped. The activities of
warehouses include transportation consolidation, break bulk, product mixing, cross-
docking, protection against contingencies, smoothing of supply chain and provide
value added services.

Warehouses can be called distribution centers as well. Most companies set

up distribution centers to perform just-in-time concept to increase the customer
service level. This is to coordinate better between the connection of manufacturers
and consumers in supply chain. Warehouses are also needed to perform high speed
in term of cycle time performance and also to achieve zero defects in term of
inventory errors in supply chain logistics. However, warehouses have imposed 2 to
5% on the cost of goods sales. Minimizing the cost of warehouses but in between
increasing performance of warehouses has become an important business issue.
Warehouse Ownership

Warehouse ownership imposed different cost on the goods sales. There are
public warehouse or private warehouse. There are several factors to be considering
during the decision-making stage such as throughput volume, stability of demand,
density of market area to be served, security and control needs, customer service
needs and multiple use needs of the firm.

Public warehousing is a type of outsourcing job where the public warehouses

are run by the third parties. There are advantages in using public warehousing as
well. Public warehousing costs mostly all variable. It requires a limited capital
investment on the balance sheet because it does not has a fixed cost unlike private
warehousing. By public warehousing, it has less depreciation risk as in no assets
own by company that depreciate gradually. With low throughput volume, it is more
economies of scale by public warehousing. Nevertheless, less administration and
access to fully trained staff and up to date technology required. Less employment
risk will occur. Public warehousing also provides a more professional and expertise
in service. There will be tax advantages if leasing. More innovation and new thinking
will be provide by public warehousing because it is theirs expertise in warehousing
management. Because of the bonded warehousing among the third parties
companies, a better and reliable service will be provided. Public warehousing is
better to handle the fluctuating demand in order to minimize the costs of goods sales.

However, there are disadvantages in public warehousing. There will be no

control of cost as costs fixed and more hidden costs for unforeseen incidents.
Besides, there is less direct control of the services provided. It will lower down the
customer service level, as the feedbacks from customer are not directly reachable to
the company itself. It will cause less response to request as well. Moreover, there will
be higher potential damage to the goods because of more movement of goods
acquired.

Private warehousing virtually requires a high and constant volume in order to

overcome the highly fixed costs. Private warehousing requires company to own a
warehouse and this imposed on the high cost in the beginning. However, these costs
will be overcome or minimize with high throughput volume and stable demand in the
market. Private warehousing has special physical control enable to arrange more
accurately in transportation and reduce cost. It also enables multiple uses of needs
such as office lot built in warehouse. Customer service level will be increase as
private warehousing has the direct contact with customer and feedbacks will reach to
company faster. Private warehousing also provides a higher security. With high
throughput volume, total cost of private warehousing will be lower than public
warehousing.

For Sony of Canada Ltd., it owned few warehouses in Canada to fulfill the
market in that country. It is worth for Sony to owned warehouses to be distribution
centers in Canada as Sony is one of the most comprehensive entertainment
companies in the world and have high throughput volume in Canada.

Numbers of Warehouses

By private warehousing, numbers of warehousing is crucial as in imposing

costs. There are several factors affecting the numbers of warehouses and also the
location of warehouses as in centralized and decentralized warehouses.
Substitutability of inventory will be lower for centralized warehouses than
decentralized warehouses because the inventory cost is lower for centralized
warehouse. Fewer warehouses will have less stock kept minimizing the inventory
cost; therefore the substitutability will be low. However, high value of product will
keep in centralized warehouse as the warehouse will be monitored closely and better
security will be provided. Purchasing size will be large for centralized warehouses to
maintain the safety level of inventory to prevent stock out while it is low for
decentralized warehouses because it has many warehouses and the purchasing
power has distributed to each of the warehouse and therefore the size is small
compare to centralized warehouse. It will be special warehouse for centralized
because of only one warehouse in the region so it is special. The product line for
centralized will be diverse but limited for decentralized because decentralized is
meant for distributing the fixed product to fulfill the requirement other than the area.
Therefore it is limited in product line. But, decentralized can provide a better
customer service level as these warehouses are closer to customer and able to
perform faster to customer compare to centralized.

For example, Sony of Canada Ltd., with headquarters in Toronto, sales

offices in Vancouver and Montreal and distribution centers in Coquitlam, British
Columbia, and Whitby, Ontario, approximately 1,200 employees support a network of
more than 500 authorized dealers and 80 Sony Style retail locations across Canada.
Sony of Canada Ltd. Is wholly owned subsidiary of Sony Corporation in Japan. Sony
chosen to owned many warehouses or distribution centers because it has a huge
market in Canada and with these DCs, Sony able to increase their customer service
level to lock up customers.

Warehouse Storage Systems

Most of the warehouses used the similar operations to manage warehouses.

From the input, there will be receiving, then is put-away, storage, order picking,
preparation for shipping and lastly is delivering for the output. The performance of
these operations indicates the efficiency of the management warehousing. The
activities when receiving are unload vehicle, schedule the carrier which arriving at
what time to improve the workload scheduling, inspects for the damages of goods
before unload and compare with purchase orders before unloading as well.

Then, in put-away stage, this is to identify the product by using barcodes or

labeling information and identify the storage location also. Then the products is move
to the specify location and records are updated accordingly. This is an important
stage where the goods are located will affects the following stages if mistakes were
made.

In storage process, appropriate equipments such as forklifts and stackers are

used to handle the goods to place in the storage location. These storage locations
are mainly according to the popularity, unit size and the throughput volume. Fast
moving consumers goods (FMCG) are mostly placed in the front for faster and easier
access in a warehouse.

For order picking stage, information like customers’ purchase orders are
received and process. There are few methods to pick the goods by walk and pick or
batch picking. Small quantity of orders is applicable with walk and pick but batch
picking can be perform when many orders received and time can be saved when few
different customers’ order are pick together in a time. It will be time saving and more
accurate if automated method is used such as automated storage and retrieval
system (AS/R).

After orders are picked, goods will be located at order assembly area for final
checking, packaging and labeling as well. It is the final stage in warehouse process
before the orders are ship out to customers. For delivering, carrier is to be scheduled
way before the orders in the final stage of warehouse process to match the timing for
smooth operation. Besides, document such as delivery orders or bills of lading are to
be prepared. Then, records have to be updated to obtain the latest information of the
inventory level in warehouse. These activities have to be performing in timely manner
in order to smooth the flow of operations.

Warehouse Layout and Design

The principles of warehouse layout design are use one story facilities, move
goods in a straight line, use efficient material handling equipment, use an effective
storage plan, minimize aisle space with concerning the safety, and maximized the
usage of height of the building. The basic areas for certain purposes are receiving
bay, storage area, order preparation area, and shipping bay. Office spaces may also
be provided depending on the purpose of the warehouse. Space in the warehouse is
charged but the cost can be vary by fully utilized the space by installing racking
system. Racking system utilized the height of the building and provides more spaces
for storage.

Besides, security issue is important when planning for the layout of a

warehouse. Transportation interface should be prohibited from accessing the storage
area. By designing a warehouse that high security and maximum usage of space,
cost can be reduce because of prevented lost of goods and enable to perform a large
capacity storing. For electronic industry, security is very important as the goods are
small in size but the value is high. Therefore, a design of warehouse for electronic
industry emphasis more on security rather than storing space because the products
are mainly small in size.

Material Handling

Material handling is performing in a short distance movement in or between

buildings and a transportation agency such as loading and unloading. Material
handling is to increase the effective capacity available in warehouse. After unloaded
from carriers, goods need to be stored and material handling is performing. With
effective material handling, it is to reduce product handling to avoid possible
damages cause to the goods and also save time. By material handling, it can also
develop effective working conditions and reduce heavy labor. Logistics service is
improving and costs are effectively reduced with performing efficient material
handling. Material handling is important also in electronic industry because of the
value and the sensitivity of the electronic products. Less movement is recommended
for handling electronic products to avoid excessive shock and vibration. Besides,
material handling equipment is the most important when performing material
handling.

There are principles of material handling in following table:

Material Handling Equipment
 Forklifts are the most common equipment found in a warehouse. It can
reduce the labor force and also save time is handling material. But only suitable
equipment will provide the efficient handling. For electronic industry, hand pallet truck
can be used because the products are not very heavy and to move in between
warehouse. Equipments also need to suit the environment of the warehouse. For
example, electronic products requires clean environment to minimize the defect of
products. Therefore, battery powered forklifts are suggested in use of electronic
warehouse to minimal the damages and also to save cost in term of maintenance of
forklifts. Battery powered forklifts provide clean, quiet and power efficient with low
running costs. With forklifts, more work could be done with less labor thus the total
costs can be reduce efficiently.

Packaging and Labeling

Electronic products required efficient packaging to prevent damages of the

products. There is primary, secondary and tertiary packaging. Primary packaging is
the packaging that is direct contact with the product. Polyurethane is used in the
stage for electronic products for the best resiliency. For the secondary packaging is
the boxes or the package that covers the primary packaging like corrugated box.
Lastly is tertiary packaging where this packaging holds many of the products mostly
on pallets such as shrink-wrap. All the packaging provides physical protection for the
products to reduce shocks, compression, high temperature and others. While for
barrier protection, mostly oxygen absorbers are used to prevent vapor to damage the
products for electronic industry. There are many others packaging material for
protection purpose. Packaging does not only meant protection of goods but also
improve efficiency in handling and distribution. For example usage of pallet in
packaging has ease the handling in big bulk of goods. Besides, it is also because of
customers’ interest for marketing purpose.

Labeling provides information and identifies products. It provides information

of vendor, product type, place of manufacture, product price and others. Labeling is
important where storing is based on the labeling information and same goes to
picking. Labeling save times and also reduces damages by showing signs on the
packaging boxes with certain handling cares. One of the standard markings in
labeling is bar coding. Below are examples of labeling sign:
Conclusion

In short, warehousing management is essential in maintaining or reducing

cost as it implied 2 to 5% of the cost in goods sales. Effective management is able to
maintain or reduce the total costs and also providing an excellent performance in
supply chain. Sony has considered all the factors thoroughly and therefore they are
performing well with the aid of latest technology. Warehouse is important in supply
chain mainly because it smoothen the flow of products from inbound to outbound.

REFERENCES

Images

http://images.google.com/imgres?imgurl=http://www.otb-
games.com/graphics/otb/warehouse.jpg&imgrefurl=http://www.otb-
games.com/archive.html&usg=__hhpJJmyeHYyiUkIWh02QTrtKrwc=&h=347&w=600
&sz=20&hl=en&start=3&um=1&tbnid=_3_U4zCo083J-
M:&tbnh=78&tbnw=135&prev=/images%3Fq%3Dwarehouse%26hl%3Den%26client
%3Dsafari%26rls%3Den-us%26sa%3DG%26um%3D1

http://images.google.com/images?hl=en&client=safari&rls=en-
us&um=1&sa=1&q=keep+it+dry+labeling+sign&btnG=Search+Images&aq=f&oq

Information

http://news.thomasnet.com/companystory/819301

Books

Stuart Emmett,(2005): Excellence in Warehouse Management How To Minimize

Costs and Maximize Value, West Sussex: John Wiley & Sons Ltd.

Langley/Coyle/Gibson/Novack/Bardi,(2008): Managing Supply Chains A Logistics

Approach 8th Edition, Canada: Cengage Learning