WAREHOUSING AND INVENTORY MANAGEMENT.

CHAPTER 1

Definition
A simple definition of a warehouse is:
‘A warehouse is a planned space for the storage and handling of goods and material.’ (Fritz Institute)
A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers,
importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings
in industrial areas of cities and towns and villages. They usually have loading docks to load and unload
goods from trucks.
In general, warehouses are focal points for product and information flow between sources of supply and beneficiaries.

Function, Benefits and Types of Warehousing

A warehouse may be defined as a place used for the storage or accumulation of goods. The function of
storage can be carried out successful with the help of warehouses used for storing the goods.

Warehousing can also be defined as assumption of responsibility for the storage of goods. By storing
the goods throughout the year and releasing them as and when they are needed, warehousing creates
time utility.

Types of Warehouse in India: A broad definition

1. Traditional Warehouse: These are warehouses used to store low value, non perishable goods. These
are no frills warehouse where the costs are low. They are used to store items like plastics, low value
cook ware, motor
 parts (Unbranded) etc. The materials are kept on the floor or on pallets. These warehouses do not
have high ceiling and the roof are concrete or asbestos / tin. There is no truck loading docks.

2. Modern Warehouse: With the opening of Indian Economy for foreign goods, the warehouse
segment had to upgrade itself. The warehouses are now built with the warehousing activity in mind.
The important factors are:

a) Location – it is normally close to a consumption centre

b) Approach - with bigger and bigger vehicles being used, the warehouse should be so located
that the approach road is wide enough for the vehicles to operate.

c) Loading / Unloading docks – In order to ensure safe and damage free loading and unloading,
the warehouses are built docks which normally are inclined with the truck platform. Where
various types of vehicle with different heights are a regular feature, the warehouses have dock
levelers.

d) Turning radius – the warehouse should provide for the vehicle to turn easily on to the dock.

e) Compound – Modern warehouses are situated in a compounded space for security

f) Uninterrupted power and communication network – this is very important since many
warehouses work 24 / 7 and depend a lot on internet to send and receive information.

g) Availability of adequate manpower - no amount of automation can replace human manpower.

Thus these warehouses should have basic facilities like public transport, Pantry, Environment
friendly work area.

h) High Roofing and Ventilation: This ensures better utilization of space and work environment.

i) Trimix flooring- To ensure that the warehouse floor has the capacity to withstand the
movement of forklifts, hand pallets etc.

j) Procedures- There has to be well documented guidelines on the day to day operations and security.

k) Safety Equipments: The warehouse should have fire safety equipments like extinguishers, Sand
buckets, sprinklers, water hydrant etc.

3. Temperature controlled / cold room warehouses.

These warehouses are used to store temperature sensitive items like Chocolates, Vaccines, dry
fruits, fresh fruits, marine and meat products.
CHAPTER 2

Functions of

Warehousing: Storage:
This is the basic function of warehousing. Surplus commodities which are not needed immediately can be
stored in warehouses. They can be supplied as and when needed by the customers.

Importance of Warehousing In the Development of Trade and Commerce:

Warehousing or storage refers to the holding and preservation of goods until they are dispatched to the
consumers. Generally, there is a time gap between the production and consumption of products. By
bridging this gap, storage creates time utility.

There is need for storing the goods so as to make them available to buyers as and when required. Some
amount of goods is stored at every stage in the marketing process. Proper and adequate arrangements to retail
the goods in perfect condition are essential for success in marketing. Storage enables a firm to carry on
production in anticipation of demand in future.

A warehouse is a place used for the storage or accumulation of goods. It may also be defined as an
establishment that assumes responsibility for the safe custody of goods. Warehouses enable the businessmen
to carry on production throughout the year and to sell their products, whenever there is adequate demand.

Need for warehouse arises also because some goods are produced only in a particular season but are
demanded throughout the year. Similarly certain products are produced throughout the year but
demanded only during a particular season. Warehousing facilitates production and distribution on a
large scale.
Benefits from Warehouses:

1. Regular production:
Raw materials need to be stored to enable mass production to be carried on continuously. The Japanese
have introduced the JIT ( Just in Time ) concept in India where the goods are stored in warehouses and
moved to the production line only when needed as per a schedule. Sometimes, goods are stored in
anticipation of a rise in prices. Warehouses enable manufacturers to produce goods in anticipation of
demand in future.

2. Time utility:
A warehouse creates time utility by bringing the time gap between the production and consumption of
goods. It helps in making available the goods whenever required or demanded by the customers.

Some goods are produced throughout the year but demanded only during particular seasons, e.g., wool,
raincoat, umbrella, heater, etc. on the other hand, some products are demanded throughout the year but they
are produced in certain region, e.g., wheat, rice, potatoes, etc. Goods like rice, tobacco, liquor and jaggery
become more valuable with the passage of time.

3. Store of surplus goods:

Basically, a warehouse acts as a store of surplus goods which are not needed immediately. Goods are often
produced in anticipation of demand and need to be preserved properly until they are demanded by the
customers. Goods which are not required immediately can be stored in a warehouse to meet the demand in
future.

4. Price stabilization:
Warehouses reduce violent fluctuations in prices by storing goods when their supply exceeds demand and by
releasing them when the demand is more than immediate productions. Warehouses ensure a regular supply of
goods in the market. This matching of supply with demand helps to stabilize prices.

5. Minimization of risk:
Warehouses provide for the safe custody of goods. Perishable products can be preserved in cold storage. By
keeping their goods in warehouses, businessmen can minimize the loss from damage, fire, theft etc. The
goods kept in the warehouse are generally insured. In case of loss or damage to the goods, the owner of goods
can get full compensation from the insurance company.

6. Packing and grading:

Value addition is done to certain products in a warehouse. Some products have to be conditioned or processed
to make them fit for human use, e.g., coffee, tobacco, etc. A modern warehouse provides facilities for
processing, packing, blending, grading etc., of the goods for the purpose of sale. The prospective buyers can
inspect the goods kept in a warehouse.

7. Financing:
Warehouses provide a receipt to the owner of goods for the goods kept in the warehouse. The owner can
borrow money against the security of goods by making an endorsement on the warehouse receipt. In some
countries, warehouse authorities advance money against the goods deposited in the warehouse. By keeping
the imported goods in a bonded warehouse, a businessman can pay customs duty in installments.
CHAPTER 3

Type of Warehouses:
There are three types of warehouses as described below:

Private Warehouses:
The private warehouses are owned and operated by big manufacturers and merchants to fulfill their own
storage needs. The goods manufactured or purchased by the owner of the warehouses have a limited value
or utility as businessmen in general cannot make use of them because of the heavy investment required in
the construction of a warehouse, some big business firms which need large storage capacity on a regular
basis and who can afford money, construct and maintain their private warehouses. A big manufacturer or
wholesaler may have a network of his own warehouses in different parts of the country.

Public Warehouses or Shared Warehouse:

A public warehouse is a specialized business establishment that provides storage facilities to the general
public for a certain charge. It may be owned and operated by an individual or a cooperative society. It has to
work under a license from the government in accordance with the prescribed rules and regulations.

Public warehouses are very important in the marketing of agricultural products and therefore the
government is encouraging the establishment of public warehouses in the cooperative sector. A public
warehouse is also known as duty-paid warehouse.

Public warehouses are very useful to the business community. Most of the business enterprises cannot
afford to maintain their own warehouses due to huge capital Investment. In many cases the storage facilities
required by a business enterprise do not warrant the maintenance of a private warehouse. Such enterprises
can meet their storage needs easily and economically by making use of the public warehouses, without
heavy investment.

Public warehouses provide storage facilities to small manufacturers and traders at low cost. These warehouses
are well constructed and guarded round the clock to ensure safe custody of goods. Public warehouses are
generally located near the junctions of railways, highways and waterways.

They provide, therefore, excellent facilities for the easy receipt, dispatch, loading and unloading of goods.
They also use mechanical devices for the handling of heavy and bulky goods. A public warehouse enables a
businessman to serve his customers quickly and economically by carrying regional stocks near the important
trading centers or markets of two countries.

Public warehouses provide facilities for the inspection of goods by prospective buyers. They also permit
packaging, grading and grading of goods. The public warehouses receipts are good collateral securities
for borrowings.

Bonded Warehouses:
Bonded warehouses are licensed by the government to accept imported goods for storage until the payment of
custom duty. They are located near the ports. By storing the goods in this warehouse, the importer does not
have to pay import duty immediately. Also by moving the material to a bonded warehouse, he avoids paying
high demurrage charges.
These warehouses are either operated by the government or work under the control of custom authorities.
CHAPTER 4

Policies and
Procedures Policies
The policies contain hard and fast rules and regulations that define the general conduct of the warehouse
operation. Examples of the types of policies that organisations will define are as follows:

 Organisational specific warehouse management policy and procedures guideline outline;

 Health and safety;
 Human resources management;
 Security;
 Pest control;
 Warehouse maintenance and cleaning;
 Quality control;
 Record keeping and reporting;
 Reverse logistics – return of goods and exit strategy in the event of downscaling or shutting down operations;
 Disposal of obsolete and damaged goods.

Procedures
The procedures document defines step by step how the activities in the warehouse should be carried out
and clearly defines the processes to be adopted. These can be adopted as ‘best practice’.
The procedures provide visibility of the operations for managers and customers.
However, in creating such procedures, care must be taken to avoid constraining the use of local initiative
which might be required to deal with local conditions. Procedures should be considered as streamlining the
business processes and providing checks and balances. They provide guidance to warehouse managers and
must have some level of flexibility to cater to unique situations. This can be achieved by limiting the level of
detail that the procedures document defines, allowing more flexibility and/or by arranging ‘dispensations’ to
allow departure from the procedures in order to optimise local performance, especially in emergencies.
The procedures will normally provide the step by step guidance on how to manage each aspect of
warehousing and may cover:

 Receiving and issuing of supplies;

 Quality control or verification;
 Storage of goods;
 How to control stock movement (stock control);
 Documentation flow;
 How to detect and deal with stock losses;
 How rejected material will be managed; and
 How to deal with unwanted material, obsolete and scrap, disposal.

Types of Warehouse Space

 Commercial: in rented building used for business.

 Government or state: such as at the ports or harbours. This is common in emergency situations.
 Transit: for temporary storage of goods destined for different locations and need storage for a very short time.
 Bonded warehouses: for storage of goods whose duty is unpaid and especially where the goods are
destined to another country. Pre-positioned stock is often held in bonded warehouses so that export
is quick and can sometimes be stored for long periods.
 Open storage: not ideal for perishable products but in emergencies, sometimes the only alternative.
 Space that is owned and managed by the organisation.
 Pre-fabricated warehouses where there are no permanent structures available. This is common
practice in emergencies.
Inbound process: Outbound:

 Inspect the document Documentation

 Security verification. Dispatch by decentralising the cargo in regarding to the
 Inspect the outer cargo destinations.
 Off the cargo (in temporary storage area) Verify the security check.
 Open case inspection with prior permission

Other warehouse Process after receipt of cargo:

 Order expectation from buyer.

 Stock verification/prepare checklist against order.
 Cross check the place/condition of cargo.
 Pick the cargo.
 Labelling the cargo.
 Addressing.
CHAPTER 5

Basic Principles of Warehouse and Inventory Management

 Planning inbound receipt procedures.

 Storage formalities e.g.:
o Location management
o Inventory control
o Occupational health and safety
 Outbound delivery procedures.

How to Select and Set-Up a

Warehouse Determining Needs:
In determining needs, one should look beyond the basic need of a warehouse to store things. Whilst, this
is correct there are also other considerations.

 The volume of goods;

 Speed of through-put required;
 As a transit point;
 Breaking bulk location;
 An area for sorting and consolidating different goods;
 To enhance the speed of the response;
 To protect and account for inventor; and
 As a buffer in the event of a break-down or delay in the supply pipeline.

Determining Storage
Requirements: Selecting a
Suitable Location
There are a range of factors to consider when deciding on the location of a new warehouse facility and these
may vary depending on whether you are selecting a location for a temporary building or selecting from one
of a number of existing buildings.
These may include:

 Proximity to ports of entry and beneficiaries;

 Existing buildings;
 Security;
 The context;
 Site condition;
 Access;
 Services;
 Land size available;
 Purpose of warehouse;
 Previous use of the facility;
 Floor weight;
 Access to labour;
CHAPTER 6

Warehouse Selection:
Factors to consider:

 Nature and characteristics of goods to be stored;

 Nature of handling equipment available;
 Duration of storage needed i.e. Short term or long term;
 The need for other activities, e.g. Repackaging, labelling, kitting, etc;
 Access and parking for vehicles;
 Number of loading docks required; and
 Secure compound.

Warehouse Preparation
Planning: Space layout
The areas that should be planned are both the general storage areas and the areas for goods receipt,
consignment picking and goods dispatch. It is also desirable that space should be set aside for the
following activities:

 Equipment maintenance and parking;

 Charging of equipment batteries such as pallet trucks;
 Refuelling of trucks;
 An area for garbage disposal e.g. Empty packaging;
 A quarantine area for keeping rejected goods, goods to be sent back or destroyed;
 An employee rest area;
 Washroom; and
 An administration office.

Planning
It is worth keeping these requirements in mind during the planning of the main operating areas. Planning
consideration needs to be given to the following:

 Allocate space for each type of product and locating number;

 Allow sufficient space for easy access to the stacks for inspecting, loading and unloading. Stacks
should be one meter from the walls and another meter between stacks;
 Sizing the goods receipt and despatch area;
 Allow space for storage of cleaning materials and supplies;
 Allocate areas for damaged items by consignment number;
 Allow sufficient space to repackage damaged items and place it in separate stacks;
 Sufficient free space is needed to operate a warehouse effectively. When planning the size of a
warehouse consider:
o Planning on having about 70-80% utilisation of available space, whilst considering:
o Throughput rate
o Number of stock keeping units (sku)
o Handling characteristics of items, etc.
  See stacking guide on the boxes

Besides, in some boxes you would see the following sign

It indicates the number of boxes that can be stacked one above the other without damaging the last box.
CHAPTER 7
How to calculate warehouse storage
space: Special storage needs
Some items require special attention in terms of the type and security of the storage area. For example:

 Medical supplies, drug shipments and food items can contain a large number of small, highly-
valued and, often, restricted items, many with a limited shelf-life. Thus, a secure area is
required, as well as judicious attention to expiry dates. Thus, FIFO is important
 Hazardous products such as fuels, compressed gases, insecticides, alcohol, ether and other flammable,
toxic or corrosive substances must be stored separately, preferably in a cool, secure shed in the
compound but outside the main warehouse.
 Antibiotics and vaccines may require temperature-controlled cold storage arrangements, with
sufficient capacity and a reliable, as well as a back-up, power source.
 With combustible items, such as alcohol and ether, specific attention is required when storing and
handling. Inventory management techniques need to be implemented to prevent wasteful surpluses
and to
ensure proper stock rotation to avoid costly losses due to expired goods. Procedures for controlling,
preserving and releasing medical supplies and drugs should be established in consultation with the
medical experts.

Space utilisation and handling

As shown above, the warehouse operation is composed of four key work activities:

 goods receipt;
 storage;
 picking;
 goods dispatch;
To estimate the resource requirement for the whole warehouse, one should start by estimating the
requirements for each of the key work activities in turn and the level of demand. Then, the resource
requirements for all activities should be combined together, taking into account the way that the activities are
phased during the working day, in order to make an estimate of the total resources required.

Aspects to consider when managing Warehouse Operations

 Planning the workload;

 Allocating resources;
 Space utilization & handling,
o Receiving goods;
o Storing goods.
 Assembling consignments;
 Despatching consignments;
 Disposal of goods;
 Pest control;
 Security;
 Inventory management;
 Handling and stacking techniques;
 Occupational health and safety.

Managing Inventory Levels

It has been established that the role of inventory management is to ensure that stock is available to meet the
needs of the beneficiaries as and when required.
Inventory represents a large cost to the supply chain. This is made up of the cost of the inventory itself, plus
the cost of transporting the goods, cost of managing the goods (labour, fumigation, repackaging, etc) and
keeping the goods in warehouses. The inventory manager's job is to make inventory available at the lowest
possible cost.
In order to achieve this, the inventory manager must ensure a balance between supply and demand by
establishing minimum holding stocks to cover lead-times. To achieve this, the inventory manager must
constantly liaise with the programs to keep abreast of changing needs and priorities. The warehouse must
always have sufficient stocks to cover the lead-time for replacement stocks to avoid stock-outs.
Thus inventory management is balancing demand and supply with minimal holding cost.
CHAPTER 8
Inventory Control
There are two methods of inventory control that are applicable to emergency situations:

1) reorder level policy

2) reorder cycle policy

Both are applicable to business situations and have associated pros and cons. Note that economic order
quantity (EOQ) in practice only works in a fairly stable environment where demand variability and
replenishment lead-time are reasonably stable and predictable. This is not the case in an emergency.
Economic order quantity is applicable in more stable environments such as refugee camps and perhaps later in
a relief/recovery phase.
Inventory management in an emergency is more ‘project based’, matching supply with demand in a rapidly
changing environment. This requires building a supply chain that has a high level of flexibility and
adaptability, with rapid identification of need and rapid fulfilment of that need through the supply chain.
In managing this sort of system, inventory should be considered in relatively small quantities that are
attached (pegged) to an identified need then moved (and tracked) through from source to the identified need
(the user).
Optimisation comes from having logistics systems that can configure, procure and consolidate these
packages quickly and a distribution chain that is flexible and can adapt to changing requirements quickly
and at least cost.
Information systems that facilitate transparency of the supply chain inventory levels, location, and demand
provide the necessary visibility to facilitate good planning and effective decisions that maximise services and
reduce costs.

Stock control and movements

The warehouse/inventory manager is responsible for monitoring the movement of goods as they are
transported from the supplier and for the control of stock movement in the warehouse facility.
The vital stock control measurements include:

 Establish levels of operating stocks based on consumption/rate of usage. The stock levels shall be
reviewed from time to time depending on current needs.
 Ensure that weekly and monthly stock balances reports of each stock item and the total value are prepared;
 Maintain monthly stock usage report of each item kept in the store and the overall in the usage trend in
last six months;
 Review and report on six monthly basis slow moving items indicating the last movement date the
unit value and total value and liaise with user department;
 Establish quantity, lead -time and availability of each item supplied on the market;
 Keep a record of all non- stock items received from suppliers, returned to suppliers and issued out to users.

Monitoring Goods in Transit

 Order lead time

 Tracking orders for goods
 Controlling stock movements:
o Establishing minimum stock levels and monitoring the same;
o Goods receipt quality inspections;
o Physical stock control in the warehouse;
o Controlling specialised items; and
o Releasing stock from storage and goods despatch.
To facilitate and account for movement of stocks the following documents could be used:

 Delivery notes;
 Goods received notes;
 Stock card;
 Bin card; and
 Consignment notes.

Stock Records - Documentation

 Stock identification;
 Stack cards,
 Bin cards;
 Stock checks:
 stock loss reporting;
 Reporting of stock levels.

Resource Requirements
In addition to the work methods, equipment and space requirements it is essential that the warehouse is
adequately resourced. This is done by planning or estimating the requirements for people and equipment in
order to operate the warehouse facility.
There is a trade-off to be made between the people and handling equipment requirements for any given workload.
In global warehouse operations, which are run like commercial operations, the focus is on minimising the
cost of running the operation. In this situation, it is often better to invest in handling equipment and reduce
the dependence on people resources.
However, in field operations, many organisations prefer to hire local labour which provides employment
instead of relying on handling equipment.
The requirement for the total amount of resources required will be determined by the amount of goods
flowing into and out of the warehouse.
CHAPTER 9
Basic Warehouse Equipment
Material handling is the art and science of moving, packing and storing of substances in
any form. (or)
Efficient short-distance movement of goods that usually takes place within the confines of a building such as
a plant or a warehouse or between a building and a transportation

OBJECTIVE
 To Lowers unit materials handling cost;
 To reduce manufacturing cycle time;
 To provide better control of the flow of materials;
 To provide better working conditions;
 To provide Contribution for better quality by avoiding damages to products;
 To Increase storage capacity;
 To provide higher productivity at lower manufacturing costs.

Required equipment may include:

1. Sufficient quantities of standard forms, calculators and stationery to keep proper storage records;
2. Small tools for opening cases, such as hammers, pliers, crowbars, steel cutters;
3. Tools and materials for store repair and simple maintenance;
4. Supplies for reconditioning damaged packaging, such as bags, needles, twine, oil containers, stitching
machine, strapping machine, adhesive tape and small containers or cartons;
5. A sampling spear for inspecting foodstuffs;
6. Scales for weighing goods;
7. Standard wooden pallets in sufficient numbers – ideally international;
8. Standardization organization’s “euro” type (120 × 80cm);
9. Two-wheel hand trolleys for moving supplies within the warehouse;
10. A pallet-jack to move pallets;
11. A forklift where pallets are to be loaded and offloaded from trucks;
12. Brooms, dust pans, brushes, shovels, sieves, refuse bins for cleaning and disposing of collected waste;
13. First aid kits, flashlights, fire extinguishers and other fire-fighting equipment both inside and
outside the warehouse;
14. Weighing scales; and
15. Ladders
16. Computers and internet connection
17. Work stations
18. Lighting
19. Generators / back up ups.

ADVANTAGES

1. Improve efficiency of a production system by ensuring the right quantity of materials delivered at
the right place at the right time most economically.
2. Cut down indirect labor cost.
3. Reduce damage of materials during storage and movement.
4. Maximize space utilization by proper storage of materials and thereby reduce storage and handling cost.
5. Minimize accident during materials handling.
6. Reduce overall cost by improving materials handling.
7. Improve customer services by supplying materials in a manner convenient for handlings.
8. Increase efficiency and saleability of plant and equipment with integral materials handling features.
Care during Warehouse Operations

Care of Warehouse equipment

Warehouse equipment is maintained to prevent accidents and breakdowns from occurring.
Maintenance activities consist of inspections, regular servicing and monitoring performance for failure
trends, as this will enable symptoms to be recognised before failure occurs.
Equipment maintenance has a strong health and safety bias. Often health and safety legislation will
impose on management an obligation for safe systems of work. Ensuring safe policies and procedures of
work will require an examination of men, machinery, methods, materials and environmental aspects.
Some areas to pay attention to:

 planned maintenance
 maintain equipment
 maintain building
 completion of maintenance records
Legal Considerations
Leasing Temporary Warehouses/Contracting.
The common practice in emergencies is to lease or rent, not purchase warehouses. In this situation, there
is often a shortage of suitable buildings or locations for warehouse space and this can often cause the costs
to increase significantly. Therefore, it is often necessary to utilise temporary warehouse space for as short
a time a possible.
Care must be taken with the drawing up of the lease agreement (See Warehouse Rental Contract sample)
with the owner. The following items are basic inclusions and in a lease agreement:

 The cost for the lease;

 The duration of the lease agreement;
 Exit clause: the period of notice required for terminating or extending the lease period.
Confirmation of the existence of property insurance, covering third-party, fire, water damage,
window breakage, etc;
 Details of any security arrangements;
 A detailed inventory of any equipment, fixtures and fitting included with the building and detailed
description of their condition;
 Confirmation of either sole tenancy or details of other tenants;
 Information about the ground or floor strength per square metre;
 The weight capacity of any equipment such as forklifts, racks and shelves;
 In situations where neutrality is important, care must be taken to establish the actual owner of the
building, which might be different from the ‘lessor’ of the building e.g. The military, religious
groups or government;
 Force majeure;
 Indemnity; and
 Insurance
CHAPTER 10
CHAPTER 11

GOODS RECEIVED NOTE

From: (Supplier) Order No

Delivery Note No:

Invoice No:

To: (Receiving) Requisition No:

Requisition By:

Date:

Item No. Item Code Item Specification Unit Qty Ordered Qty Received Unit Cost Total Value Balance due

Stores Officer:

Name………………………… Signature…………… Designation………………….. Date…………

Users Acceptance Certificate:

Name…………………………. Signature…………… Designation…………………... Date…………

CHAPTER 12

Loss Damage Report

This is a record of a loss that has been incured. It details the amount of commodity lost, where the loss
occured and the persons responsible. It is also used for compiling the loss claim register.
CHAPTER 13

Stock Record Keeping

Compan
y Name:

Product
Code:

Product
Descript..

SKU No:

INBOUND

Order Quantit
referenc y Receipt Despatch Stock Today's Final Stock
e Ordered Receipt
Receipt
Date Time GIN / Quantity LR / GC no
GRN

Outbound

Despatc Openin Minim

h Order g stock al Today's
Stock Despatch
LR/ GC Mode of Gate
Invoice No Time To No GON/GD Quantity Trsp. Pass
N
CHAPTER 14

COSTINGS

Operational Costs
per.sqft sqft amt/mth amt/yr amt/5yrs

RENTALS 10 30,000 3,00,000 36,00,000 1,80,00,000

sundry charges 20,000 2,40,000 12,00,000

Manpower expenses 1,89,000 22,68,000 1,13,40,000

Marketing Cost 235000 28,20,000 1,41,00,000
TOTAL for 5 89,28,000 4,46,40,000
years
TOTAL PER 7,44,000
MONTH
TOTAL PER 24.80
SQFT/MTH

Manpower Costs/ month

Nos cost/head cost/mth
wh mgr 1 50000 50000
asst mgr 1 25000 25000
Labor 8 12000 96000
Security 2 9000 18000
189000

Marketing Cost
Expenses Head Unit cost/head cost/mth per/year
Head Logistics 0 0
GM Marketing 0
Executives 2 30000 60000 720000

Mktg expenses 1,25,000 6,25,000

Sales expenses 50,000 2,50,000
Total 235000 1595000

per
Sales Expenses month
Travelling Expenses 10000
Conveyance 40000 (2 staff X 80 Kms x Rs 10 x 25 Days)
CHAPTER 15

Investments
per
year
Landed TOTA Amortiz
cost(Rs)/ L Usef Cost Deprecia Cost e
Equipments UOM QTY uni t Lande ul of tio n of d
d cost life capit cost capit costs/m
(Rs) yrs al al th

1,0
Vertical racks PP 0 2,000 20,00,000 10 12.5% 2,00,000 2,50,000 37,500
0

Battery Nos 1 8,50,000 8,50,000 8 12.5% 1,06,250 1,06,250 17,708

stacker
Hand pallet
trolleys Nos 5 16,000 80,000 8 12.5% 10,000 10,000 1,667

Battery Nos 10,50,000 - 8 12.5% - - -

forklift

Fire Nos 12 1,800 21,600 8 12.5% 2,700 2,700 45

extinguishers 0

CCTV SET 1 1,00,000 1,00,000 8 12.5% 12,500 12,500 2,083

Electrificatio SET 1 5,50,000 5,50,000 8 12.5% 68,750 68,750 11,458

n

Furnished SQFE 300 2,000 6,00,000 8 12.5% 75,000 75,000 12,500

office ET

Leased line SET 1 9,000 9,000 5 12.5% 1,800 1,125 24

4

PCs Nos 3 40,000 1,20,000 5 12.5% 24,000 15,000 3,250

Printers Nos 2 15,000 30,000 5 12.5% 6,000 3,750 81

3

UPS Nos 3 3,000 9,000 5 12.5% 1,800 1,125 24

4

Security gate SET 16,000 - 8 12.5% - - -

Pantry SET 1 15,000 15,000 8 12.5% 1,875 1,875 31

enclosure 3
Tables,
chairs, SET 1 20,000 20,000 8 12.5% 2,500 2,500 41
fans 7

Coolers Nos 2 9500 19,000 5 12.5% 3,800 2,375 51

5
Unloading
metal Nos 1 10000 10,000 8 12.5% 1,250 1,250 20
plate 8

Signages SET 1 40000 40,000 8 12.5% 5,000 5,000 83

3

Wooden Nos 1000 500 5,00,000 5 12.5% 1,00,000 62,500 13,542

pallets
 Weigh scale Nos 1 25000 25,000 8 12.5% 3,125 3,125 52
1
Generator
backup Nos 1 330000 330000 8 12.5% 41,250 41,250 6,875

Cleaning Nos 1 150000 150000 8 12.5% 18,750 18,750 3,125

machine

Water tanks Nos 100000 0 8 12.50 - - -

etc %

TOT 54,78,600 6,86,350 6,84,82 1,14,265

AL 5

TOTAL PER 3.81

SQFT/MONTH

GRAND TOTAL PER SQFEET/MTH 28.61

Chapter 16

Warehouse Management System.

A Warehouse Management System or WMS, automates all the functions discussed in the earlier
chapters, making decision making easy and operations error free. It also helps in reducing the time
and labour in doing an activity thereby eliminating waste and making the operations price
competitive. These packages are tailored to need.

Given below are the activities accomplished by the

WMS. Optimisation Principle

● Automatic identification of loads/identity control

● Warehouse zoning

● Control operations in real time mode

● Workflow optimization

● Remote personnel management

● Authority levels and privileges control

● Labor standards

● Keep record of any event and action

● Material handling equipment control

● Routing optimization and load tracking and tracing

● Order staging by optimal vehicle routs (task interleaving)

● Graphical representation of the warehouse layout

● System configuration

● Report generation

● System of help

● Support of RF and bar code equipment

● Integration with ERP system

● Statistics exchange

● OLAP (online analytical processing) Inbound management

Inbound Management

● Advanced notification

● Receive the nonstandard, unpacked product and returns

● Cross-docking Operations on product in stock

Operations of Product in stock

● Automation and goods stocking and warehouse operations

● Put away and inventory storage rules

● Inventory allocation priority definition

● Inventory control

● Product age and expiration date control

● Load status control

● Load reallocation

● Sorting

● QC & quarantine

● Inventory management

● Inventory management by FIFO or by expiration date/shelf life

● Inventory by various units of measure

● Warehouse balance management/optimal safety stock level

● Stock inventory

● Physical counting

● Cycle counting

● Writing-off scraps and rejects

● Inventory update and elimination of load lost Order processing

Order Processing

● Order planning

● Goods reservation/backup

● Picking

● Staging

● Reserving for special orders

● Kitting/assembling

● Wave processing

● Shipment

● Direct loading regardless of order continuity

● Prior consolidated orders shipment

● Forward picking and replenishment

● Order re-planning

● Order cancellation and processing changes

● Handling exceptional situations

Personnel Management

● Screening Personnel management

● Labour productivity analysis

● Reports on every warehouse operation during certain period of time

Other Functionalities

● Keep record on every fulfilled task More available functionality

● Virtual warehouses (stocks) support

● Preparation of the warehouse for putaway

● Receiving extra ware

● Receiving measuring product by parts

● Weight control

● Certification control

● Control during process of manufacturing

● Random control

● Single control

● Integration with the product manufacturing processes

● ISM (instock manufacturing)

● Integration with conveyor (interfaces to control conveyor diverts and other MHE requirements)

● Goods compatibility control

● Handling loads of extreme dimensions

● Loads labeling

● Palletizer and Applicator handling

● Vehicle loading optimization

● Re-loading
CHAPTER 17

Are your warehousing strategies GST ready?

Post 1st July 2017, when the GST is implemented, there will be a Single Indirect Tax system PAN India and

because of its simplified and uniform approach, there is surely going to be a more positive impact of GST on

warehousing in India.

The companies will be able to take rebate on all types of business transactions whether it is inter-state or

intra-state and be competitive in their industry. Since, there will be a single level playing field for all

companies, the expectations from the Logistics Service Partner (LSP) for robust Warehouse &

Transportation services will increase

Impact of GST on Warehousing

Currently, the companies opt for multiple warehouses PAN India. The idea behind this is to save on inter-

State Sales tax by transferring goods from one location to another, reflecting it as Stock transfer movement

and take rebate to reduce product costs. This resulted in higher daily warehouse operating costs and also

higher transportation costs.

With the implementation of GST, the local state taxes will be eliminated and there will be single tax

applicable across the entire country. This will enable the companies to achieve cost-efficiency in their

operations and the benefit of it will ultimately be passed on to the end consumer in the supply chain.

Cost of warehousing operations will decline once the GST comes into play

Restructuring of warehouses as per location

At the moment, location is the most critical factor of consideration when leasing warehousing space, then

comes the cost of leasing the real estate space in a particular state/city.

Post GST since the operating costs will decrease; companies will consolidate their smaller warehouse

facilities into larger ones and expand around the crucial consumption centres.

Restructuring of warehouse locations post GST

Post the implementation of the GST, warehousing occupants will take decisions purely on the

basis of reach to market, quality and size requirements.

Conclusion:

In a nutshell, the advantages on warehousing after GST is consolidation of stock at the warehouses

improves demand planning and inventory management.

While all this looks rosy, the major challenge the companies would face is transportation and deliveries

across a bigger geography. With lesser number of warehouses, the location of warehouses and their
transportation networks would eventually turn out to be critical. This, demands for better connectivity,

technology and management. Thus, making it critical to have a stringent planning to build an efficient and

advanced supply chain model.

Movement of Goods Under GST – E-Way Bill
Rules
E-way bill is an electronic way bill required for movement of goods under GST. The E-way
contains the details of the movement of goods and it can be generated online on GST
common portal. Under the GST law, the generation of E-way bill is mandatory for
movement of goods of more than Rs. 50,000. Before commencement of transportation of
goods, a unique e-way bill number is generated for every specific consignment and the GST
officer can inspect the e-way bill at any time during the journey.

Mandatory Requirement of E-Way Bill

E-way bill is applicable for any movement of goods having consignment value of more than
Rs. 50000.

Time of Generation of E-Way Bill

The E-way bill should be generated online before the commencement of movement of
goods. Upon generation of E-way bill, a unique E-way bill number (EBN) shall be made
available to the supplier, the transporter and the recipient on the GSTcommon portal. The
government may provide facility to generate e-way bill through SMS.

Person Responsible for Generation of E-Way Bill – Supplier/Recipient or Transporter

Goods are Transported by Registered Person (Consigner or Consignee)
Where goods are transported by a registered person as a consigner or consignee in his own
vehicle or hired, he may generate the E-Way bill in Form GST INS-I electronically on GST
portal.
Goods handed over to Transporter without Generation of E-Way bill
Where an e-way bill is not generated by a registered person acting as a consigner or
consignee and goods are handed over to the transporter, the consigner or consignee shall
furnish the details of the transporter in Part-B of GST INS-I and the transporter shall
generate the E-way bill.
Inward Supplies From Unregistered Person
If the supplier of goods is not registered under GST, the E-way bill can be generated either
by the consignee or by the transporter.

Form Applicable for E-way – GST INS-1

The E-Way bill for movement of goods should be generated in Form GST INS-1. Part-A of this
form contains the detail of goods and the Part-B contains detail of transporter.

E-Way Bill For Consignment Value of Less Than Rs. 50,000 – Optional
It is not mandatory to generate e-way if consignment value is less than Rs. 50,000.
 However, registered person or transporter can generate e-way bill at his option.

Multiple Consignment in One Vehicle

The Transporter shall also generate a consolidate E-Way bill in Form GST INS-2 electronically
before movement of goods and separately indicate the serial number of e-way bills
generated for each consignment.

Transfer of Goods From One Vehicle to Another in the Course of Transit

If the goods are transferred from once vehicle to another in the course of transit, a new e-
way bill shall be generated electronically on GST portal before the transfer of such goods.

E-Way Bill Generated but Goods are not Transported

If an e-way bill is generated but goods are not transported, then the E-way bill can be
cancelled within 24 hours of generation. However e-way bill can’t be cancelled if it has been
verified in transit.

Validity Period of E-Way

DISTANCE (KMS) VALIDITY PERIOD (COUNTED FROM TIME OF GENERATION)

Upto 99 KM 1 Day

100-299 KM 3 Days

300-499 KM 5 Days

500-999 KM 10 Days

1000 KM or More 15 Days

Documents to Be Carried By The Transporter (Person in Charge of Conveyance)

 Invoice, Bill of Supply or Deliver Challan
 A copy of E-Way Bill or E-Way Bill Number (EBN)
Inspection and Verification
 The authorized officer may intercept any conveyance to verify the goods, E-Way bill,
and other documents.
 The officer shall record online summary report of inspection of goods in Part-A of
Form GST INS-3 and final report in Part-B of such form.
 The department can’t conduct another physical verification of goods if the physical
verification of such goods has already been done at any other place during transit.
However, the department can conduct multiple physical verifications if there is any
specific information about tax evasion.
 If the vehicle has been intercepted and detained for a period exceeding 30 minutes,
the transporter may upload this information in form GST INS-4.