TITLE: INTRODUCTION TO WAREHOUSING

Warehousing is the activity of holding goods over a period of time. The goods themselves are
often referred to as inventory or stock. Goods are being held when there is a difference
between the time, place, quantity, or value of the goods being created and being consumed.
Warehousing has three main processes which may be active simultaneously: accumulation,
storage, and withdrawal. Warehousing is a fundamental human activity and consequently
warehousing is ubiquitous and of economic and social importance. Some of the oldest
examples of warehousing are the storage of grains between the harvest and usage to produce
bread when humans evolved from hunting and gathering to agriculture. Granaries, which are
warehouses for grain, dating back to 8000-6000 BC have been found in the Middle East and
Egypt, where the hot and dry climate made storage with little spoilage possible. Warehousing
systems are the systems that perform the warehousing activity, i.e., the systems that store the
goods. Warehousing systems are studied in systems engineering and like all systems they
have a structure and exhibit a behavior. If the storage of goods occurs in a building, then this
building is called a warehouse. Warehouses have become even more prevalent with the
advent of the industrial revolution when mass production of industrial goods became
possible.

Warehousing: A Supply Chain Necessity

In a perfect supply chain, warehouses would have no place. As yet though, the perfect
supply chain doesn’t exist, so warehousing is essential to maintain an efficient,
uninterrupted flow of materials and goods from source to point-of-use.

Warehousing is an integral part of Logistics and Supply Chain Management System. For most of the
common people, warehousing involves just storing of the products while it involves inbound
functions for storing and outbound functions of packing and shipping.

The following factors are important for warehousing in Logistics and Supply Chain
Management.

Location
The location of the Warehouse should be the center where receiving storing and distribution
of the products occurs. From identification of the products according to the categories on
receivable to sorting and dispatching to the concerned areas for easy shipment is coming
under warehousing operations. The storage of items involves the process by which products
are categorically stored at useful locations so that it can be shipped at the convenient time.

Operations to Add Value

The importance of warehousing in logistics management is because it helps to deliver the
right products at the right place at right time. Consolidating orders assembly of components
and mixing of products etc also comes under warehousing operations. It is also possible to
reduce the cycle times and inventories through proper management of products at the
warehouse.
 Economic Advantage
Through warehousing, it is possible to make the operations efficient and utilize the storage
capacity to the maximum. By consolidating and accumulating operations the economic
benefits can be seen in warehouse management.

A Definition of Warehouse Operations

Rick Stinchcomb of the University of Oklahoma Press defines warehouse

operations as such: “The goal of warehouse operations is to satisfy
customers’ needs and requirements while utilizing space, equipment, and
labor effectively. The goods must be accessible and protected. Meeting this
goal requires constant planning and ongoing change.”
Breaking it down, warehouse operations covers a number of important areas,
from the receiving, organization, fulfillment, and distribution processes. These
areas include:

 Receiving of goods
 Cross-docking of goods
 Organizing and storing inventory
 Attaching asset tracking solutions (like barcodes) to assets and
inventory
 Integrating and maintaining a tracking software, like a warehouse
management system
 Overseeing the integration of new technology
 Selecting picking routes
 Establishing sorting and packing practices
 Maintaining the warehouse facility
 Developing racking designs and warehouse infrastructure

Types of Warehouses

The warehouse is the most common type of storage, though other forms
do exist (e.g., storage tanks, computer server farms). Some warehouses
are massive structures that simultaneously support the unloading of
numerous in-bound trucks and railroad cars containing suppliers’ products
while at the same time loading multiple trucks for shipment to customers.
Below we discuss five types of warehouses:

Private Warehouse

This type of warehouse is owned and operated by channel suppliers and

resellers, and used in their own distribution activity. For instance, a major
retail chain may have several regional warehouses or “fulfillment centers”
supplying their stores, or a wholesaler will operate a warehouse at which
it receives and distributes products.

Public Warehouse

The public warehouse is essentially space that can be leased to solve

short-term distribution needs. Retailers that operate their own private
warehouses may occasionally seek additional storage space if their
facilities have reached capacity or if they are making a special, large
purchase of products. For example, retailers may order extra merchandise
to prepare for in-store sales or order a large volume of a product that is
offered at a low promotional price by a supplier.

Automated Warehouse

With advances in computer and robotics technology many warehouses

now have automated capabilities. The level of automation ranges from a
small conveyor belt transporting products in a small area all the way up to
a fully automated facility where only a few people are needed to handle
storage activity for thousands of pounds/kilograms of product. In fact,
many warehouses use machines to handle nearly all physical distribution
activities, such as moving product-filled pallets (i.e., platforms that hold
large amounts of product) around buildings that may be several stories
tall and the length of two or more football fields. And the newest trend in
warehouse automation is the use of warehouse robot technology, where
small robots assist with product movement.

Climate-Controlled Warehouse

Warehouses handle storage of many types of products including those

that need special handling, such as freezers for storing frozen products,
humidity-controlled environments for delicate products, including produce
or flowers, and dirt-free facilities for handling highly sensitive computer
products.

Distribution Center
There are some warehouses where product storage is considered a very
temporary activity. These warehouses serve as points in the distribution
system at which products are received from many suppliers and quickly
shipped out to many customers. In some cases, such as with distribution
centers handling perishable food (e.g., produce), most of the product
enters in the early morning and is distributed by the end of the day

ECONOMIC REASONS FOR A WAREHOUSE

There’s a growing gap between demand and supply in this market,” says Chandranath Dey, senior director and
head of industrial consulting and supply chain consulting, JLL India. The consultancy projects that there will be
344 million sq ft of warehousing space in India by 2022, more than double the current capacity of 169 million sq
ft, and triple the capacity that existed in 2015. Strong demand and increasing formalisation of the space are also
attracting big investments.

Some $10 billion in fresh investments from marquee global players such as Warburg Pincus, Blackstone and
KKR have been committed, with smaller funds such as Everstone tying up with local operators to gain an
advantage.

Warehouses are the vital pillars of the supply chain for any company that relies of the distribution of a product
from factories to shops. Companies might own or lease spaces, but all of them need well-oiled warehouses to
keep their supply chain spiffy.

If the last two years has seen a strong build-up thanks to the introduction of GST, the next phase is also likely to
see differentiated demand based on quality.

Capacity Boom
Warehousing capacity growth at ecommerce giant Amazon is illustrative of how this sector is booming. “We have
more than 50 Fulfilment Centres (FC) across 13 states with a combined storage space close to 20 million cubic
feet,” says Akhil Saxena, VP, customer fulfilment, Amazon India. “We closed 2018 with a 1.5 times growth in
storage capacity from the previous year…. Our warehouse presence in India has grown from one in Bhiwandi,
Maharashtra when we launched Amazon. in in June 2013 to 50 such buildings in the past five years.”

While large corporations such as Amazon and HUL are constantly expanding, logistics players such as DHL and
FedEx are also racing to add new warehouse capacity.

Then there’s a a growing list of developers that want in on this high-yield asset and are tying up with global
investors.

OPERATIONAL AND SERVICE REASONS FOR A WAREHOUSE

Central Storage Location

A centralized location for all your storage needs help to decrease the creation gap. This
means you can get, store, circulate, and deliver products effortlessly to save time and cost.
For instance, a warehouse close to a loading dock is perfect for getting and storing goods
from suppliers. For another organization, a warehouse amidst the city can enable them to
distribute and mail things to their clients easily. Preferably, while picking a distribution center,
you want to look at a location that will make the most sense for your operations. This can be
an area that can be easily accessed by your providers or one that is in your objective
 market.

Improved Order Processing

At the point when clients submit their orders, all they’re worried about is the delivery
of their products. They need auspicious delivery and quality services. Any potential
satisfaction issue isn’t their worry; it’s yours. Warehousing offers you “security
stocking.” Ideally, this means your items are accessible for transportation at
whatever point clients put in their orders. You don’t have to satisfy orders from your
production facility. You can have enough stock for the following couple of months,
and this reduces delays in delivery. The exact opposite thing you need is to lose your
long-term customer or a deal since you couldn’t fulfill an order.

Offers Additional Storage

You can have a storage space your creation facility, yet your stock volume can exceed it
during your bustling months. For this situation, getting a warehouse space will make the
most sense. You need your products to be safe from harm and robbery. Essentially,
warehouse space is incredible for putting away surplus products, which clients and
customers don’t require promptly. Most organizations, as a rule, deliver merchandise fully
expecting interest. This means they’ll require sufficient capacity for their surplus
merchandise until their clients and customers begin putting in goods of order. A warehouse
makes a perfect alternative to address your issues.

Improved Production Quality

It’s anything but difficult to expect that warehousing stock control frameworks just screen
amounts. With better storage management, it’s conceivable to monitor your production
quality. You can utilize it to follow your crude materials and finished products. These
numbers can decide the number of materials that experience your production procedure. As
such, when you recognize imperfections or quality issues in the production procedure, it’s
simpler to seclude deficient materials or finished goods. An effective warehouse center
following framework likewise enables you to work with your merchants and providers to
recognize and limit defective raw materials. This causes you to save time as you won’t have
to complete control at your office. Stock quality control systems help to monitor the time
span of usability and termination dates of your materials. Specialists can without much of a
stretch to recognize and remove stocks before they expire.

Leverage Seasonal Growth

As a private company, you don’t need amazon-like facilities to hit your business targets. A
warehouse space will simply do the trick. For this situation, you have scale your tasks when
the shopping seasons come. You can monitor purchaser trends and stock up on inventories
for peak seasons. This won’t prompt a critical increment in expenses. Basically, a
warehouse enables you to help your tasks as required with no cost weight. You can exploit
new chances and deals cycles in the market.

Risk Management

As an entrepreneur, the exact opposite thing you need is to encounter violent fluctuations in
prices. This normally happens when the supply of a specific product exceeds the market
demand. On the off chance that you choose to move, you can without much of a stretch
endure loses. Rather, you can utilize a warehouse to store your product. At the point when
the interest turns out to be more than the prompt supply and productions, you would then be
able to discharge them to the market. A warehouse additionally gives safe care of transient
products. You can use cold storage and refrigeration to avoid product spoilage. Obviously,
you can expect this storage service to cost more than customary capacity. Likewise,
businesses can limit the misfortune from flame, robbery, and harm by utilizing a warehouse
to store their products. Also, your merchandise is protected, so you can anticipate full pay if
there should be an occurrence of any harm or misfortune.

Final thoughts 

 Warehousing As a business owner, you have different choices, including private, public, and
bonded warehouses. Whatever your choice, utilizing warehousing services can streamline
your supply chain.

CLASSIFICATION OF WAREHOUSE

1- ON THE BASIS OF FUNCTIONALITY

1. 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.

2. Price Stabilization:
Warehouses play an important role in the process of price stabilization. It is achieved by the
creation of time utility by warehousing. Fall in the prices of goods when their supply is in
abundance and rise in their prices during the slack season are avoided.

3. Risk bearing:
When the goods are stored in warehouses they are exposed to many risks in the form of theft,
deterioration, exploration, fire etc. Warehouses are constructed in such a way as to minimise
these risks. Contract of bailment operates when the goods are stored in wave-houses.

4. Financing:
Loans can be raised from the warehouse keeper against the goods stored by the owner. Goods
act as security for the warehouse keeper. Similarly, banks and other financial institutions also
advance loans against warehouse receipts. In this manner, warehousing acts as a source of
finance for the businessmen for meeting business operations.
5. Grading and Packing:
Warehouses nowadays provide the facilities of packing, processing and grading of goods.
Goods can be packed in convenient sizes as per the instructions of the owner.

2- ON THE BASIS OF STAGE IN SUPPLY CHAIN

Stage 1: Plan
Planning involves a wide range of activities. Companies must first decide on their operations
strategy. Whether to manufacture a product or component or buy it from a supplier is a major
decision.

Stage 2: Source
This aspect of supply chain management involves organizing the procurement of raw
materials and components. When sources have been selected and vetted, companies must
negotiate contracts and schedule deliveries.
Stage 3: Make
This stage is concerned with scheduling of production activities, testing of products, packing
and release. Companies must also manage rules for performance, data that must be stored,
facilities and regulatory compliance.
Stage 4: Deliver
The delivery stage encompasses all the steps from processing customer inquiries to selecting
distribution strategies and transportation options. Companies must also manage warehousing
and inventory or pay for a service provider to manage these tasks for them.
Stage 5: Return
Return is associated with managing all returns of defective products, including identifying the
product condition, authorizing returns, scheduling product shipments, replacing defective
products and providing refunds.

3- ON THE BASIS OF COMMODITY TYPES

Whenever potentially combustible materials are being stored, they receive a classification
number based on the fire risk they involve. This alerts workers to how the material should be
handled and where and how it can be stored. There are several levels of commodity
classification.

Class I Commodities: These are essentially noncombustible products that will not burn by
themselves and no sprinkler system is required if these materials are stored by themselves.
Class I commodities are generally found stored on wooden or non-expanded polyethylene
solid deck pallets or in ordinary paper wrappings without pallets.

Class II Commodities: These commodities are items that are class I but that are stored in
combustible packages, such as slatted wooden crates, solid wooden boxes or multiple-
thickness paperboard cartons. Examples include empty boxes in boxes or free-flowing
powdered products in paper bags on pallets. Class II designation means that more fire risk is
involved because of the storage and configuration of the noncombustible materials.

Class III Commodities: These are items made of wood, paper or natural fiber material, or
Group C plastics, that are stored with or without pallets. As a general rule, Class III should
contain no more than 5% of Group A or B plastics by weight or by volume.

Class IV Commodities: This designation includes commodities in class I, II, or III that
contain Group A plastics in ordinary corrugated cartons. If Group A plastic packaging is used
on Class I, II, or III products they are also given a designation of Class IV.Plastics are given a
grouping based on their specific heat of combustion. Storage considerations with plastics
include the material that the commodity is stored in, i.e. plastic wrappings, and the pallet on
which it is stored.

Group A Plastics: These are the most combustible of the plastics. Many thermosetting
plastics fall into Group A.

Group B Plastics: Group B plastics have a lower heat combustion and burning rate than
Group A plastics but are higher than that of normal, non-combustible plastics. Thermosetting
and thermoforming plastics are examples of Group B plastics.

Group C Plastics: Group C plastics are those that have the lowest fire risk, such as most
thermosetting,fluorinated and lightly plasticized plastics. However, when these materials are
combined with plastics from

Group A or B, this may increase their fire risk. Group C plastics should always be inspected
carefully to see if their fire risk is increased.

High Hazard Commodities: These are commodities that present a high risk of fire and danger
due to their high rate of combustion. If a commodity presents a risk above Class I, II, III, or
IV then it is labeled as high hazard. Group A plastics are usually included in this label.When
determining the proper label for a commodity there are several things to consider, including
the type of material the commodity is made of, the type of packaging it is stored in, and the
types of pallets that it is stored on if any. An item’s status can change depending on how it is
combined with other items, so care needs to be taken to correctly determine the proper fire
hazard designation.
4- ON THE BASIS OF TEMPERATURE
Humidity Vs Temperature
Humidity levels in warehouses should be from 40-50% RH (Relative humidity). When there
are elevated humidity levels, the environment can spur on mould growth on stored items,
corrosion, rust, and condensation. It can also lead to additional insurance costs.
RH is directly related to the temperature of the air, therefore if the heat increases, the relative
humidity will decrease and vice versa.
Humidity and temperature should be monitored together to gain a full spectrum and not just
maintain an ideal temperature but maintain the moisture in the air.

Size and Layout

Many challenges associated with warehouse heating and cooling is the size of the warehouse.
It may be a good idea to get an expert in to review the design and layout of the building.
However, it goes further than that.

Divide and Conquer

It is often said that cooling air is more expensive than heating it. While warehouses will need
cooling, it is even more important to remember that different products require different
temperatures.
This can create challenges within logistics. For warehouses that may require multiple
temperature zones or the products change over seasons, make sure you invest in and be clear
and concise in product position planning.
SUPPLY CHAIN TRENDS AFFECTING WAREHOUSE
The following three supply chain trends are emerging as companies seek to maintain an
organized and highly-efficient supply chain system to stay competitive in today’s market.

Goodbye Massive Warehousing, Hello Nimble Execution

As technology continues to evolve, the art of maintaining a productive supply chain must also
change to keep up with the physical laws of supply and demand.
The days of housing a massive inventory based on market analysis and yearly sales
predictions have given way to a much more nimble “on-demand” supply model where most
items in the shipping chain are pre-sold and in the pipeline to be delivered to the final
customer.The result is that companies are reducing their warehouse space and the staffing
required to maintain these cavernous storage facilities as they opt to employ third-party
vendors to handle order management on an as-needed basis.The goal is to keep items moving
toward their final destination while minimizing the risk that comes with over handling of
merchandise.

Data Links Provide Real-time Tracking

Modern warehouse service providers have the ability to track a package from the
manufacturer’s facility to the end delivery point and report the status of that package at any
time to the customer.Large warehouse megastores frequently use these companies to ship
items like appliances and furniture from the manufacturer directly to the end customer. By
constructing a web portal that links with their client’s backend system, each shipment is
tracked from the moment of the order to the time of final delivery.Both the megastore client
and the end-use customer receive regular notification of the status of shipments. The ability
to create a single delivery price using this method allows the megastore to include shipping as
part of the final price, creating a one-size fits all scenario that is pleasing to the end user.
Notice that in this scenario, the product never touched any warehouse owned by the
megastore.

Knowledge Work Becoming More Globalized

As supply chain management becomes less dependent on brute manual labor to move goods,
it is more important to develop knowledge workers that are global in nature. Dealing with
analytics, procurement processing, and analytics will soon account for more than half of the
actual labor hours performed in executing the delivery of goods and services.As this side of
the equation evolves, it becomes even more important to support multiple languages and
employment cultures to seamlessly apply the supply chain process across the globe.Expect to
see companies based in one country utilize logistical planning to put procurement centers,
data analysis laboratories, and other important parts of the supply chain lifecycle in global
locations that make the most geographic sense

WAREHOUSING SECTOR IN INDIA

• Manufacturing activities are concentrated largely in the southern and north-eastern parts of
NCR. Currently, the NH-48 and NH-19 cluster in the southern region and the NH-24 and
NH-34 cluster in the north-eastern region together account for 85% of the total manufacturing
activity within NCR. This is one of the primary reasons for which most of the existing
warehouses operate from one of these clusters. While Delhi, NH-44 and NH-9 also have
various manufacturing units, their share in NCR’s total production output is considerably
lower than the other regions.

• The factors clearly indicate that the demand for manufacturing-led warehousing space in
NCR will be concentrated primarily in the NH-48 and Ghaziabad clusters, with sectors such
as auto and auto ancillary, cement, chemicals and pharmaceuticals and food processing
leading in terms of this demand.

• The NH-48 cluster is well served by its comparative proximity to the two most important
retail markets in NCR- Gurgaon and Delhi. Together, they account for more than 86% of the
total retail spending in NCR and hence, it becomes imperative for retailers to have their
warehouses located as close to their target market as possible.

• Moreover, with the emergence of E-tail, the delivery time from the warehouse to the
customer has shrunk to under three hours. This necessitates E-tailers to have a warehouse
within a driving distance of 60-90 minutes of the end consumer. Since warehousing markets
in the NH-48 cluster can access major consumption markets of Delhi and Gurgaon within this
time frame, it gives the cluster an edge.

• Similarly, the Ghaziabad warehouse hub is coveted due to its proximity to the densely
populated consumption hubs of Ghaziabad, Delhi, Noida and Greater Noida in addition to the
manufacturing hubs of Ghaziabad, Faridabad and Sonipat.

• The NCR warehousing market is prominently located from a logistics standpoint as the
upcoming Eastern and Western Dedicated Freight Corridors intersect at Dadri in the
Ghaziabad warehouse hub.

• The NCR has always been a strong warehousing market and transaction volumes more than
doubled YoY to6.5 mn sq ft during 2017
• The landlocked Bengaluru Metropolitan Region’s (BMR) key manufacturing hubs have
emerged next to the National Highway (NH)-4, which provides port connectivity via Mumbai
and Chennai. Towards the north-west, NelamangalaDabaspete is a prominent warehousing
submarket while the eastern belt of Hoskote-Narsapura is an emerging warehousing location.

• The Nelamangala-Dabaspete warehousing cluster is a 30 km belt on Tumkur Road that

connects to Mumbai via NH-4. Situated near the Peenya Industrial Area, it is an excellent
road with its service lanes lined with manufacturing units from automobile, pharmaceutical
and food and beverage sector occupiers. This cluster’s intrinsic strengths are complemented
by lower land prices, which will ensure future supply of warehouses.

• The Hoskote-Narsapura cluster is an established industrial hub connected to Sriperumbudur

in Chennai via Old Madras Road on NH-4. Easy access to this automobile hub has led many
auto and auto ancillary occupiers to establish their footprint here.

• Hoskote-Narsapura is also emerging as a warehousing hub due to consumption-led demand

by logistics and e-commerce occupiers. Ease of delivery to the eastern and south-eastern
consumption centres of Whitefield, Outer Ring Road and Sarjapur Road, which are within an
hour’s drive away, is a major driver for this micro market.

• Other warehouse clusters that have come up are Soukya Road in the East, Bidadi on Mysore
Road and Bommasandra on Hosur Road. With the exception of Soukya Road that is in the
vicinity of IT/ITeS belt of Whitefield, the other two clusters have come up in the Southern
belt next to industrial clusters.
• Sustained growth rate of Indian economy coupled with the roll-out of the Goods and
Services Tax (GST) kept occupiers focused on expansion and consolidations in 2017.

• The Karnataka State Budget 2018-19 envisages formulation of a Logistics Policy for
seamless movement of goods and services from manufacturing hubs to consumers. A 400
acres multi-modal logistics park is also proposed to be developed near Bengaluru which
should enhance the industrial and warehousing infrastructure in the city.
•

The development of three large MIDCs –

Talegaon, Chakan and Ranjangaon – in the northern region of Pune has led this belt to be
commonly referred to as the manufacturing hub of Pune. Incidentally, emerging as base for
the city’s warehouse development.

• For the Chakan-Talegaon warehousing cluster, the biggest advantage is the location of two
major MIDCs in its vicinity, namely Chakan MIDC and Talegaon MIDC. Additionally, it is
also very well connected with the Ranjangaon MIDC and Sanaswadi industrial area, which
are at a distance of 50 km and 40 km, respectively.

• In case of the Wagholi-Ranjangaon warehouse cluster, the advantage of this warehousing

belt is its proximity to the city centre. Wagholi is located barely 16–18 km from the Pune
railway station and 12–16 km from the prominent retail destinations of the city. The travel
time taken for the last mile distribution to the various parts of the city is less than an hour’s
drive from Wagholi, thereby increasing its attractiveness. Additionally, the connectivity with
the major industrial hubs of Sanaswadi, Ranjangaon and Chakan is excellent from this
cluster.

• Another major industrial cluster that has gradually developed in Pune is the Sanaswadi-
Shikrapur belt. Thissis also situated in the north-eastern part of the city where manufacturing
units of companies are located. Since this industrial cluster is not developed by the MIDC, it
is relatively small compared to the other clusters in Pune.

• The annual transaction volumes of warehousing space for the Pune warehousing market in
2017 was 2.45 mn. The transaction volumes recorded 22% YoY growth over 2016.