Unit4 WarehouseingAndStoresOperations

CILT Certificate
Open Learning Materials
Unit 4
Warehousing and Stores Operations
© The Chartered Institute of Logistics and Transport, February 2006

© Chartered Institute of Logistics and Transport, 2006
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior written permission of the
Institute of Logistics and Transport.
© The Chartered Institute of Logistics and Transport, February 2006

CILT Certificate – Unit 4 Warehousing and Stores Operations
CONTENTS
Section Page
1 Principles of Warehouse Design and Layout 5
• Why have warehouses? 5
• Warehouse design 5
• Location 6
• The building 8
• Warehouse operating functions 10
• Important concepts 12
• Marshalling, goods receiving and dispatch 16
2 Storage and Equipment 21

• Palletised unit loads 21
• Racking types 22
• Aisle width and equipment selection 24
• Additional fork truck selection considerations 29
3 Order Picking 35
• Objectives and principles of picking 35
• Item picking 37
• Case-picking 41
• Pallet picking 43
• Other considerations 44
4 Inventory Issues 49
• Why hold stock? 49
• Stockholding costs 49
• Inventory accuracy 50
• Stock checks 53
5 Service and Administration 57

• Service quality 57
• The concept of the “perfect order” 58
• Pareto law 58
• The administrative process 59
• Performance measurement and control 64
6 Waste Management 69
• Packaging and legislation 69
• Minimising waste 70
© The Chartered Institute of Logistics and Transport, for use in 2006 1

7 Safety and Training 74
• Equipment use and maintenance 74

• Other regulations 76
• Risk assessment and prevention 77
• Health and safety policy 77
8 Case Study 81
2 © The Chartered Institute of Logistics and Transport, for use in 2006

Unit 4 comprises 8 sections
♦ Section 1 – Principles of warehouse design and layout

♦ Section 2 – Storage and equipment
♦ Section 3 - Order picking
♦ Section 4 – Inventory issues
♦ Section 5 – Service and administration
♦ Section 6 - Waste management
♦ Section 7 - Safety and training
♦ Section 8 – Case study
The purpose of this unit is to:

♦ Explain the principles behind planning and operating a warehouse
♦ Explain the principles involved in selecting equipment for a warehouse
♦ Describe the techniques that are available for order picking operations
♦ Outline issues relating to inventory in order to reduce costs and improve efficiency
♦ Describe the process in deciding customer service levels
♦ Detail the workflow and the administration of a warehouse
♦ Explain waste management law and operations
♦ Outline the safety law framework and why safety and training is important

Section 1: Principles of Warehouse

Design and Layout
Section Objectives
Having completed this section you should be able to:

♦ Know why warehouses exist
♦ Have an appreciation of the factors influencing choice of location.
♦ Understand the key structural elements of a warehouse build
♦ Understand what activities take place in a warehouse and the flow of product
♦ Appreciate the 5 key principles involved in warehouse design
♦ Understand the importance of marshalling areas
This section will take approximately 8 hours to complete.
Why Have Warehouses?

There are four main reasons for having warehouses
♦ To provide a buffer against variations in supply and demand, by holding
stock – a safety net, in effect.
♦ To safeguard stock from damage, theft and deterioration.
♦ To record accurately receipts, current stockholding and dispatches, and
provide an interface with all other parts of the business system being
served.
♦ To enable “value-adding” processes to be conducted such as ticketing
stock for customers or repacking.
Warehouse design
The warehouse is, in most organizations, the last area in which significant
improvements can be made. If properly designed, built, planned,
organized and managed, it can improve customer service levels whilst
reducing money tied up in stock and in processes that do not add value.
This has the effect of improving an organization’s profitability.
As a designer of a warehouse, you need to consider a number of factors:

♦ Location.
♦ Building type.
♦ Warehouse operations.
♦ Materials handling.
♦ Storage.

♦ Order picking.
♦ Receiving/dispatch.
Location and building type may well be areas in which the warehouse
designer has no input as the facility is already in existence, and the design
will need to be based around existing buildings.
All of these factors are inter-related in that choices made in one area will
impact on those in another. No one area can be considered in isolation.
Most companies already have facilities that they have to work with, and
warehouse managers have to make do with buildings, equipment and
locations that are not ideal. A company will often find that what may have
been designed according to the requirements of the company several
years ago is no longer suited to the business as the size of the operation
has changed and there have been changes in the mix of customers and
suppliers.
This section, however, will enable you to look at all the elements that need
to be considered when designing and building a new warehouse. Many of
these can be revisited in a warehouse that has been in existence for many
years.
Location
There are two main factors in deciding where a warehouse should be built:
o the location of the markets being served,

o the location of manufacture of the products being sold.
The actual site chosen will often be a compromise between the two. If the
warehouse is sited close to the market, then distribution costs will be low,
but purchasing and transport costs may be high due to the distances over
which goods need to be shipped. The reverse will apply if the warehouse is
sited close to the manufacturing location. If a number of markets and
suppliers are considered, then the process can start to become quite
complex.
If your organisation decides to serve a number of different markets, then a

number of warehouses could be considered, especially if the markets are
geographically distant from each other. A European manufacturer based in
Germany, for example, could deliver to all its customers within Germany,
and perhaps even other parts of Europe, from one facility. If the same
company was also selling into North America, though, it would need to
look at setting up a new warehouse nearer that market. With such a
facility, the large distribution costs associated with the shipping of small
orders over large distances would be replaced by the reduced cost of bulk
movement of product over the same distance. The difference between the
two would justify the build and operating costs of this warehouse. As the
number of warehouses within an organization increases, however, so does

the cost of holding inventory – particularly if all the product range has to
be held at each location. It is therefore a financial exercise to determine
not only where warehouses get built, but how many.
Over the last decade, there has been a movement towards a smaller
number of better managed, better organized and more automated
facilities. Overall, this has resulted in lower costs and better service levels.
Total costs
Costs
Warehouse costs
Transport costs
Theoretical Number of depots

optimum
Optimum number of warehouses
Total costs
Costs
Distribution costs
Trunking costs
Near to manufacturer
Near to market
Optimum location / supplier
Optimum location of warehouse

The Building
Ideally, the storage and handling systems that will be used in a particular
operation should be considered before a warehouse is built. In practice
though, as a designer of a warehouse operation, you may have to make
use of an existing building, and compromises will have to be made. The
principles that are used in the design of a new building, however, can
often be used within an existing facility.
Building Height
As the cubic cost of the warehouse reduces as the height increases, there
is a strong argument to build as high as is practicable. Not only do build
costs reduce as the building height increases, but as rent and rates are
dependant on the footprint (square footage) of a building, then this adds
further justification.
Fork trucks can now lift to heights of approximately 12 metres. If the

intention is to build higher, then specialist lifting equipment will be
required, perhaps adding cost.
If a building that currently exists is too low, then raising the roof height
could be an option, although it would be difficult to implement because of
the disrupting effect it would have on operations.
Docks and Offices

Loading docks need to be designed to allow for bringing vehicles safely
onto the site, enable them to manoeuvre onto the dock itself (bearing in
mind that there is a different requirement for space for left hand and right
hand drive vehicles) and to allow the loading and unloading of the vehicle
safely and efficiently. Ideally, the docks should face the sun, and avoid
prevailing weather.
An office should be sited between the receiving and dispatch areas, ideally
on the ground floor. Other offices that do not need to be on the ground
floor can be built above these offices to minimize the amount of space
taken up.

Docks in a warehouse
photo G Wheaton
Floor Design
The warehouse floor needs to be capable of withstanding unusually high
loads. Storage equipment such as racking or mezzanine flooring results in
high point loads on the floor as the weight of both the racking and their
loads is focused on the narrow legs. The base below the floor slab and the
slab itself therefore need to be designed and built so that the racking can
be positioned as required. Besides this static loading, the floor also has to
be capable of withstanding dynamic loads – applied by the movement of
fork lift trucks, particularly when they are carrying loads. The joints
between the flooring slabs need to be capable of withstanding these loads
or the floor will break up when vehicles begin to move. In your planning
and design, the floor surface also needs to be considered, as there will be
high levels of wear in the operating aisles. Concrete surfaces should be
treated with a floor hardener.
Floors need to be very flat, and the higher the racking that is to be used
within the warehouse the flatter the floor surface needs to be. A difference
in the floor level of just 4mm over a 1500mm wide aisle translates to a
32mm deflection with equipment lifting to a height of 12m. This could be
dangerous. Furthermore, the racking itself needs to be flat to permit
access to pallets stored.
Building Column Spacing

Although it is possible to build warehouses with large clear spans, it is
more common (and less expensive) to use columns to support the roof
structure. These should be minimized though, to maximize flexibility for
future changes that may be required, and to reduce the amount of lost
space. Ideally columns should be positioned within the racks themselves to
ensure they do not interfere with the operation.

Roof spans and column spacing

picture G Wheaton
Warehouse Operating Functions

As a warehouse manager you will be responsible for four primary activities
that are conducted within your warehouse – receiving, storage, order
picking and dispatch. This is the same for different organisations, and all
types of goods. The diversity of products that need to be stored in
conjunction with operating and design constraints make warehouse design
a complex task. Overlying this is the fact that warehouses are dynamic
and need to be flexible. What would perhaps be the perfect design today
would not necessarily be so in a year’s time.
Ken Firth, in the Handbook of Logistics Management, has come to the

conclusion that many types of warehouse have common sub systems:
♦ Delivery vehicle unloading area – this is where goods are actually
brought into the warehouse.
♦ Unpacking, checking and reforming area – this is where goods are
checked and reformed into unit loads that can be stored within the
warehouse.
♦ Temporary storage (sorting) – this area is only required if there is a
need to control the flow of goods inwards for smoothing or sorting.
♦ Reserve storage – this is the main store for stock within the
warehouse.
♦ Working storage (selection) – in some warehouses, changes in unit
load patterns are required and, for example, pallets may be reduced or
part pallets may be consolidated together. This is more important
where picking activity will take place.
♦ Order consolidation – this is where all the items required for a
particular order are brought together and packaged ready for dispatch.
♦ Dispatch – this is the area that enables stock to be moved from the

warehouse onto collecting vehicles.
Data relating to all the above activities needs to be sourced and analysed
before a warehouse design can be prepared accurately, and should include
the following:
♦ Physical characteristics of the product stored, for example fragility, size
and perishability.
♦ Stock holding volumes (cartons, pallets).
♦ Throughput (number of orders, lines per order, items per line, receipts,
etc).
♦ Equipment available for storage and handling.
♦ Cost data (buildings, equipment, labour).
♦ Existing equipment and buildings constraints.
♦ Statutory requirements.
♦ Market trends – what is likely to happen in the future.
♦ Synthetics – the analysis, modelling and simulation required to
establish optimum equipment.
♦ Labour availability and quality.
♦ Service level requirements – what customers expect.
♦ Safety and security.
♦ Capital and time available.
♦ The relationship with other parts of the system – both internal with
other departments within the same organization and external with
customers and suppliers.
The basic warehouse structure should include areas for goods receiving,
bulk reserve storage, order picking, goods inwards and associated offices.
Additional space should be given to marshalling.
Very simply, the flow of product and processes within a warehouse would
be as shown below

There are many different ways to lay out and operate a warehouse, and
designers often go through the process of evaluating a number of
alternatives before a decision is made. Although the optimum least-cost
warehouse system may appear attractive, it needs to be considered along
with other aspects of the business to ensure it does not lead to
diseconomies elsewhere.
Warehouse design involves consideration of a combination of materials

handling systems, warehousing systems and layouts, different types and
costs of building, and the equipment that is available.
Important Concepts
As a warehouse designer, you will need to consider 5 important principles
in the process of warehouse design.
1. Unit Loads
Most warehouses operate with unit loads – “the assembly of individual
packages, usually of a like kind, to permit convenient composite
movement” 1
The concept is to form as large a unit as possible as early as possible, and

retain this configuration for as long as possible in order to minimize
movement and the type of handling equipment required. The most
common form of unit loads is the pallet of stock, with many of the same
item stacked on the one pallet. This results in ease and speed of handling,
better use of space, protection of products and reduction of the risk to
1
Source: Handbook of Physical Distribution Management, John Gattorna, Gower, 1981

staff. Standardisation has largely been brought about through the

International Standards Organisation (ISO).
Picture – G Wheaton
A photograph of a 40 by 48 inch (1 by 1.2 metre) pallet – a standard size
agreed by the International Standards Organisation (ISO). The pallet is 4
way entry (meaning forks can enter on any pallet face) with a perimeter
base to increase sturdiness.
At its most basic level, the pallet can be manoeuvred using a hand pallet
truck.
Picture – G Wheaton

The forks of the truck are pushed underneath the pallet and the handle
pumped to lift the pallet which can then be pulled or pushed.
If long journeys, heavy loads or lifting to any height are required, then a
fork lift truck is necessary.
2. Using Warehouse Cube

Warehouse space is expensive, and needs to be used as efficiently as
possible to avoid adding too much cost to product, which could ultimately
make it unattractive to consumers. Stock should therefore be stacked as
high as possible and as densely as possible, without compromising
accessibility for picking and shipping operations. Racking the warehouse is
the usual method used to enable this to happen. The space between the
racks needs to be considered as well as the height of the racking itself.
The closer the racks are together (the narrower the aisle), the better the
cube utilization.
3. Minimising Movement
Any movement of product within a warehouse adds cost in additional time
and resource, plus the risk of damage, and therefore excessive movement
needs to be avoided, or speeded up where this is not possible. There are a
number of techniques available for reducing movement.
♦ Separating stock for picking from other stocks, thereby keeping the
picking face as small and tight as possible.
♦ Determining which items are most popular – most frequently picked –
and locating these close to the dispatch area.
♦ By storing bulk stock (reserve) close to the picking face for those items
so that when the picking face needs to be replenished it can be done
quickly and with minimal movement.
♦ Batching orders and picking a number of them together – this can mean
picking staff going to a location once for a particular product for a
number of orders rather than a number of different trips.
♦ Adopting systems that move product to the picker (e.g. a carousel)
rather than the picker having to travel to pick the stock.
♦ Implementing zoning, which restricts picking staff to particular zones of
the warehouse, and consolidates stock picked by different staff into
customer orders at a later stage?
♦ Eliminating paperwork which has to be taken to particular stations for
processing.
It is important to ensure that attempts to minimize movement do not

result in congestion in particular areas of the warehouse and produce an
overall deterioration in performance.

4. Controlling Flow
The flow of goods, vehicles and people within the warehouse needs to be
as smooth as possible (to ensure optimum productivity), and attempts
must be made to minimize the number of cross-over points and areas of
high density traffic flows. There are two main methods for enabling this to
happen. The first is by establishing a “U” flow system within the
warehouse, where both movements into and out of the warehouse take
place on a single face of the building, although separated. The second is
“through flow”, where the input and output are at opposite ends of the
building.

5. Safety and Security

Poor design of warehousing systems can increase the risk to employees
working within that area, so it is important that in your design you keep
fork truck activities separated from where other pedestrian activities such
as picking are likely to take place. This can be either a physical separation,
or a separation in time, for instance having different activities on different
shifts. Attention must also be given to making manual handling as safe as
possible. There is also a legal requirement to assess risks in many
countries, and take steps to minimize them. The framework in the UK is
provided by the Health and Safety at Work Act 1974.
Besides the health and safety of employees, and the potential for litigation
(and costs) if accidents occur, there is also risk to product. If fork trucks
are operating in aisles that are too tight, or where there is insufficient
marshalling space, product can get damaged.
6. Marshalling, Goods Receiving and Dispatch

The marshalling area within a warehouse is used for receiving stock into
the warehouse prior to being put away, and is also used for consolidating
goods prior to dispatch. As a warehouse designer you need to consider the
yard area in which the vehicles will be arriving and departing.
The marshalling area is important within the warehouse, and it is

important to ensure that sufficient space is allocated or it is possible that
bottlenecks will develop, leading to poor labour, equipment and vehicle
utilisation, possible stock losses and negative impacts on service levels.
The marshalling area is used for incoming stock, where the products are
taken from delivery vehicles, checked against delivery documentation and
broken down into the unit loads that will be used whilst product is stored
in the warehouse.
If deliveries are in bulk from the supplier, it may have been possible to
arrange with the supplier to deliver the stock in the configurations
required. If this has not been possible, then more space will be required to
enable the stock to be sorted and reconfigured.
Once stock is reformed, it can be moved to the main storage area.
Marshalling space is also required for the dispatch of goods. If your

organisation is concerned with the bulk dispatch of unit loads (primarily
pallets), then it is possible that stock could be moved direct from the main
storage area to be loaded onto waiting vehicles, reducing the space
required. Where unit loads are not being shipped, with stock being picked
to customer orders, this is the area in which those orders can be
consolidated prior to being loaded using the method most appropriate.
This may involve roll cages, pallets, totes, or floor loading in the vehicle
for example. Space needs to be given to the equipment that may be
manoeuvred into place to load the vehicles such as conveyors or fork lifts.

If space is particularly restricted, then it is possible to increase the space

available by utilising drive-in racking, for example, in which to put goods
on receipt or store customer palletised orders prior to dispatch.
Typically, goods receiving and dispatch areas are considered less than
other areas of warehouse layout.???? What is meant by this SENTENCE?
This is because the warehouse operator has less control than in other
areas so more flexibility is required and this normally results in more
space being left than is actually required to cover for emergencies.
As a designer, you will also need to consider a number of factors when

designing marshalling, goods receiving and dispatch areas.
♦ The type, size and number of vehicles making deliveries and

collections. If there are lots of vehicles making deliveries or
collections, then more space will be required both inside the warehouse
and outside in the yard. Articulated vehicles will need more space than
vans and rigid vehicles.
♦ The means of access on to the site. This needs to be big enough to
enable vehicles to manoeuvre safely.
♦ Traffic flow around the site. The vehicles should be able to exit and
get on to the road network safely.
♦ Manoeuvring for all vehicles used on the site.
♦ Space requirements for marshalling, checking and quality
control. Sufficient space has to be given over in the warehouse to
segregating product.
♦ Product characteristics and throughput. Large volumes and bulky
items will require more space.
♦ Unit load characteristics and throughput. Consideration needs to
be given to how product will be handled, and what mechanical handling
equipment is required.
♦ The environment. There may be restrictions on deliveries out of a
warehouse sited in a residential area at night, for example.
♦ The number of loading and unloading bays required.
♦ Control and administration. Offices will be required for document
processing.
♦ Security and safety of personnel.

Activity 1
With reference to your own warehouse or one you know about, carry out the following
tasks.
1. Attempt to explain the location of the warehouse in relation to both the

organisation’s markets and suppliers.
2. Do you think your warehouse would be better located elsewhere? Explain your
answer.
3. Explain the building structure of the warehouse
4. Look at the operation and explain how it works in relation to the 5 key principles
of warehouse design.
5. Consider the marshalling area of the warehouse and evaluate whether it is an

appropriate size in relation to the operation, and explain why.
Section 1: Knowledge Check

Answer the questions below to check your understanding of the material covered in
this section.
1. What factors does a warehouse designer need to consider?
2. What are the main factors to be considered when looking at a warehouse build?
3. Why should warehouses be built as high as possible?
4. Why should warehouse floors be given special consideration?
5. What can happen if columns supporting the roof and racking layouts are not
considered together?
6. What are the four main activities that take place within a warehouse?
7. What are the 5 important principles of warehouse design?
8. What is a unit load?
9. What factors need to be considered before a warehouse design can be drawn up?
10. What measures should be taken to ensure warehouse cube is used effectively?
11. How can movement be reduced?
12. What types of flow are there in a warehouse?
13. Why are safety and security important?

14. What is the purpose of a marshalling area?
15. What factors need to be considered when determining the size of a marshalling
area?

Section 1: Knowledge Check - Answers

1. What factors does a warehouse designer need to consider?
Location
Building type
Warehouse operations
Materials handling
Storage
Order picking
Receiving/dispatch
2. What are the main factors to be considered when looking at a warehouse build?
Building height
Docks and offices
Floor design
Building column spacing
3. Why should warehouses be built as high as possible?
Cubic cost reduces as height increases.
4. Why should warehouse floors be given special consideration?
They have to withstand very high point loads from the heavy weight of the racking and
its contents acting through the very small area of the base of the legs. They also have
to be very flat to minimise the angular deflection when lifting to a height and to allow
access to pallets.
5. What can happen if columns supporting the roof and racking layouts are not
considered together?
There can be an unacceptable amount of lost space.
6. What are the four main activities that take place within a warehouse?
Receiving
Storage
Order picking
Dispatch
7. What are the 5 important principles of warehouse design?
Unit loads
Using warehouse cube
Minimising movement
Controlling flow
Safety and security
8. What is a unit load?
“the assembly of individual packages, usually of a like kind, to permit convenient

composite movement”

9. What factors need to be considered before a warehouse design can be drawn up?
Physical characteristics of the product stored.

Stock holding volumes
Throughput
Equipment available for storage and handling
Cost data
Existing equipment and buildings constraints
Statutory requirements
Market trends
Labour availability and quality
Service level requirements
Safety and security
Capital and time available
The relationship with other parts of the system.
10. What measures should be taken to ensure warehouse cube is used effectively?
Stock should be stacked as high as possible and as densely as possible with the
minimum aisle width between stacks.
11. How can movement be reduced?
Separating stock for picking from other stocks.

Locating the most popular items close to the dispatch area.
By storing bulk stock (reserve) close to the picking face for those items.
Batching orders and picking a number of them together.
Adopting systems that move product to the picker rather than the picker having to
travel to pick the stock.
Implementing zoning.
Eliminating paperwork.
12. What types of flow are there in a warehouse?
U flow and through flow.
13. Why are safety and security important?
The health and safety of employees, the potential for litigation, risk to product.
14. What is the purpose of a marshalling area?
For receiving stock and consolidating goods before dispatch.
15. What factors need to be considered when determining the size of a marshalling
area?
The type, size and number of vehicles making deliveries/collections.
The means of access on to the site.
Traffic flow around the site.
Manoeuvring for all vehicles used on the site
Space requirements for marshalling, checking and quality control.
Product characteristics and throughput.
Unit load characteristics and throughput.
The environment.
The number of loading and unloading bays required
Control and administration.
Security and safety of personnel.

Section 2: Storage and Equipment

Section Objectives

♦ Understand the methods available for storage in a warehouse
♦ Know what factors determine racking selection
♦ Understand the relationship between storage density, aisle width and fork truck
selection
♦ Understand factors other than racking type that need to be considered when
selecting a fork truck.
There are three main types of storage.

♦ Palletised unit loads.
♦ Small parts.
♦ Long loads.
The first two concern most warehouse operations, and the latter
operations such as carpet warehouses.
Palletised Unit Loads

When storing a product that is not going to be picked from (reserve or
bulk storage), the simplest method you can use for storing it is to place
one pallet on top of another in rows without any racking. This is known as
block stacking. The height to which a product can be stacked depends on
the nature of the product. The more robust and light the product, the
higher it can be stacked, taking advantage of the height of the warehouse.
This method can be applied either with a fixed-location system, where a
given area is marked out for particular stock, or with random-location by
row, that will depend on stockholding at any one time. A fixed-location
system is ideal where the product lends itself to being stacked in this way
and there is a relatively low number of items, but in large quantities.
Random-location is preferable where there is a significant variation
between the minimum and maximum stockholding of any product.
Block stacking is cheap, uses only simple equipment and can make good
use of cube. The disadvantages are that there is the possibility of damage,
control can be difficult, utilization can be poor if the product cannot be
stacked high enough and there is no means available to adopt a first in –
first out (FIFO) policy.

Individual Pallet Access

If there are a lot of items stored, with relatively low quantities of each,
then it is good practice that every pallet in a warehouse will need to be
accessible without moving other pallets first. This means that racking is
required, along with either a manual or computerized system for recording
what quantity of which product is stored in which location. Racking can
ensure that maximum use is made of available headroom. Pallets would
normally be stored randomly within racking.
Racking Types
There are many different types of racking to suit different products and
methods of operating.
Adjustable Pallet Racking

This is the most common design of pallet racking used. The standardized
“teardrop” connection design makes the uprights and crossbeam
interchangeable with those from other manufacturers. This is very
versatile and the boltless design simplifies reconfiguration of beam levels.
The alternative to boltless racking is structural pallet rack which is
assembled with mechanical fasteners (usually bolts) and may offer higher
capacities. Structural pallet racking is also sometimes designed into the
structure of the building itself supporting the roof.
Picture courtesy of SpaceRak
The figure below shows the most common configuration of selective pallet
racking where single pallet depth racking is placed back to back. This
configuration can be used with wide aisles using a standard forklift, in
narrow aisles using a reach truck, and very narrow aisles using order
selectors, turret trucks, and swing mast trucks.
Picture courtesy of Steel King Industries

Push-Back Racking
This is a racking system that incorporates a carriage or other sliding device
that makes it possible to feed multiple pallets into the same location,
“pushing back” the previous pallet. This can be used in wide aisle and
narrow aisle applications.
Gravity Flow Rack

This is a racking system which uses some type of gravity conveyer system
built into each racking level. Pallets are loaded in one side and flow to the
other side for picking. It works well for high density storage where first in-
first out (FIFO) rotation is necessary.
Drive-in/Drive-through Racking
This racking system has been designed to allow a fork lift truck to drive
into the bay creating very high density storage for non-stackable loads. It
is useful for operations with limited stock keeping units (SKUs) and high
quantities of pallets per SKU. FIFO is difficult to maintain in drive-in
racking systems however.

Picture courtesy of SpaceRak
Cantilever Racking
This is a racking system where the shelving supports are connected to
vertical supports at the rear of the rack. There are no vertical supports on
the face of the rack allowing for storage of very long pieces of material
such as piping, timber or carpets.
Wire Decking
Wire decking can be used with adjustable pallet racking and cantilever
racking, and is usually used when a product is placed into racking without
pallets. Wire decking increases safety, productivity, and reduces product
damage. There are other types of decking available including solid
decking, but fire inspectors generally do not like solid decking since it
reduces the effectiveness of sprinkler systems.
Individual items can be stored in carousels or in drawer systems as well as

in shelving. Carton live storage can also be used.
Aisle Width and Equipment Selection

Determining the optimal aisle width (the space between racking faces
along which fork lift trucks have to travel) is a critical part of an overall
storage/material-handling strategy. Aisle width decisions must attempt to
achieve the best combination of productivity, space utilization, flexibility,
safety and equipment costs for the specific application. The narrower the
aisle width, the greater the density of storage that can be achieved, but
this requires more specialised and expensive equipment.
The primary constraints to aisle width are the type of lift trucks used and
the characteristics of the loads being handled.
There are 3 main aisle types:
♦ Wide aisle.
♦ Narrow aisle.
♦ Very narrow aisle.

Fork lift trucks used for handling unit loads in racked storage are classified
by the aisle widths they are designed to work in. Wide aisle (WA) trucks
are the most common type of fork lift trucks – also known as a
counterbalance. Wide aisle trucks generally operate in aisles greater than
4 metres, handling 48” deep pallet loads (the ISO standard pallet size –
1.2 metres). They are also used in yards, marshalling areas or for vehicle
loading. They are available in a number of different configurations – fuel
type, tyre type, lift height and attachments. Many small operations will
only have a need for this type of fork lift.
A typical conterbalance truck

Picture courtesy of Crown

Narrow Aisle (NA) trucks operate in aisles of approximately 3 metres, and

include reach trucks.
The reach truck is a narrow aisle truck designed specifically for racked
pallet storage, lifting up to 12 metres. It consists of outriggers in front and
telescoping forks that permit pallets to be picked up and retracted over or
between the outriggers. This reduces the overall truck and load length,
permitting turning in a narrower aisle. Double-deep reach trucks use an
extended reach mechanism which allows storage 2 pallets deep in specially
designed double-deep rack. Reach trucks are designed for working in
racked areas only and a counterbalance is required in addition to load
vehicles.
A typical reach truck

Picture courtesy of Crown

A reach truck in operation

(picture courtesy of Le Creuset UK Ltd)
Very Narrow Aisle (VNA) trucks generally operate in aisles of less than 2
metres and work in conjunction with guidance systems (wire, rail, optical)
to travel safely within the aisles. VNA trucks can be either man-down
(where the operator remains at ground level) for moving full pallets, man-
up order pickers used to handle less-than-pallet-load quantities manually
or man-up turret trucks used to handle full pallets. There is also a swing

mast truck, where the mast can swing 90 degrees to allow access to
pallets, and the increasingly popular `bendi` truck that looks (and can be
used) like a standard counterbalance, but the mast is mounted onto the
steering axle
The most significant difference between VNA trucks and all others is that
VNA trucks turn only the load while wide aisle and narrow aisle trucks
must turn the entire vehicle in the aisle.
Man-up turret truck Swing mast truck

Picture courtesy of Drexel Picture courtesy of Crown
If space is an issue within the warehouse, then as a rough guide, moving

from a wide aisle to a narrow aisle system will increase storage capacity
by between 20 and 25%. Moving to very narrow aisle will increase
capacity by between 40 and 50%. Double deep storage is another option
for increasing storage space. This is where one run of racking immediately
backs onto another, an aisle being used every four racks, but as one
location blocks access to the location immediately behind, it is only really
practical where the same SKU is stored in both locations.
Double deep racking

Density of storage is not the sole criterion for designing warehouses.

Increasingly, speed of movement and productivity are determining the
way in which warehouses operate. Flexibility, cost and the reduction of
inventory are now key drivers.
Moving to narrow aisles and a reach or double deep reach provides greater
storage density with only marginal additional equipment investment.
Reach trucks are also capable of greater storage heights in excess of 10
metres compared to the 7 metres or less of wide aisle trucks.
Disadvantages include slower travel speeds, slower putaway/extraction

rates, longer learning curves and the inability to load trailers. Also, even
though reach trucks operate at heights above 10 metres, it is much more
difficult to place and extract loads at these heights with a man-down
vehicle. Options including lift height selectors and tilt control are highly
recommended for these high-lift applications to help increase productivity
and reduce damage and driver fatigue. Neck strain, eyestrain, potential
product damage and operator safety need to be carefully considered when
storing at these heights.
VNA storage with order selectors and turret trucks is increasing in

popularity. For storage of quantities less than a pallet, order selectors
provide quick access to product in rack up to 13 metres in height (7-10
metres are most common) and aisle widths under 2 metres. Order
selectors are very affordable although optional guidance systems can drive
up costs. Turret trucks provide unit load storage up to 13 metres and also
provide the flexibility of order selector functionality for case-picking
operations. The man-up design of most turret trucks combined with the
functionality of the turret can provide higher putaway/extraction rates
than their wide and narrow aisle counterparts. The required guidance
systems can also provide high travel speeds in aisles. Cost is the primary
disadvantage of turret truck systems as both the vehicles and the
guidance systems will cost significantly more than other systems. These
systems also require much tighter tolerances for level floors and racking.
This makes them more likely applications for new construction rather than
for retrofitting existing facilities. Although the initial costs of turret trucks
and the guidance systems are substantial (approximately £60,000
currently, excluding guidance), the savings associated with both space and
productivity can easily offset these costs in moderate to large operations.
Safety is obviously a concern with man-up vehicles and strict enforcement
of safety belts or harness use is critical. While some of the non-standard
VNA vehicles available are capable of trailer loading, man-up vehicles
(turrets and order selectors) are not designed to load or unload trailers, so
an additional staging step will be required with these vehicles.
Additional Fork Truck Selection Considerations

In addition to the design of the lifting apparatus there are some other
things to be considered when selecting a fork-lift truck.

Fuel Types
There are a number of fuel types that can be used with fork lift trucks.
Electric vehicles are designed for indoor use only. Their big advantages
are the absence of fumes and their quiet operation, along with the fact
that there is no requirement to keep an eye on fuel stock. Where shifts are
worked in a warehouse, additional batteries and charging/transfer stations
are needed. In single shift operations, or, if the truck is not used 100% of
the time, it can be charged out of work hours.
Liquefied Petroleum Gas (LPG) has the advantage of minimal fumes

(however heavy use indoors requires adequate ventilation), the ability to
use both indoors and outdoors, and the ability to quickly change LPG
tanks. They are commonly used in indoor/outdoor operations such as
timber yards.
Petrol or Diesel fork trucks should be for outdoor use only. They are
extensively used in construction and scrap yards, for example.
Tyre Type
Consideration also needs to be given to which tyre type is to be used with
a fork truck.
Cushion tyres are solid tyres generally with no tread pattern (though
tread patterns are available) designed for use indoors on smooth solid
surfaces.
Pneumatic tyres require air and are designed for use outdoors on uneven
and loose surfaces. Pneumatic tyre trucks will also have higher ground
clearance which raises the centre of gravity thus reducing its rated lift
capacity.
Lift Capacity and Lift Height

It is important to know the maximum weight and dimensions of the loads
that will be handled as well as the maximum fork height needed to stack
or rack the loads in order to determine the capacity of the vehicle needed.
The lift capacity of a truck is affected by lift height and load size. A larger
size load moves the centre of gravity of the vehicle/load combination
reducing the lift capacity as does the height the load is being lifted.
Attachments also affect the capacity of a truck. Every lift truck is required
to have a placard showing the rated capacities. If there are any changes
made to the truck — like adding an attachment — the placard must be
replaced with one showing the revised capacities. Higher-capacity trucks
are physically larger and require wider aisles than lesser capacity trucks.

Mast Options
Single, double, triple and quad are the types of masts available, denoting
the number of stages in the mast. The greater the number of stages, the
shorter the mast in the lowered position, which means that overhead
clearances can be reduced, making it useful if the truck needs to go on the
back of a vehicle, for example.
Attachment Options
There are a number of attachments and options available for lift trucks.
While most attachments are designed for use on standard lift trucks, some
of them are also used on reach trucks and VNA trucks.
Sideshift devices allow the fork carriage to slide left and right to allow
more accurate placement of the load. Sideshifts will increase productivity
and safety as well as reduce product damage by allowing the operator
more flexibility in load placement.
Fork positioners allow the operator to adjust the distance between the
forks without getting off of the truck. Used primarily in high volume
operations where there is a great variety of pallet and crate sizes handled.
Fork pivots allow the forks and carriage to pivot (rotate). Used for
transporting and dumping specially designed hoppers.
Slip sheet attachments are used where slip sheets (a sheet of

cardboard, paperboard, or plastic) are used rather than pallets. The slip
sheet attachments has a push/pull mechanism that clamps onto the slip
sheet and pulls the load onto a thin platform and then pushes the load off
of the platform when the truck reaches the destination.
Paper roll clamps are designed specifically for the handling of large
paper rolls, the paper roll clamp ensures that it clamps around the roll and
also allows for a full 360 degree rotation.
Carton clamps operate like the paper roll clamp except the clamping
surface is flat rather than circular.
Drum handling attachments are available in many different designs for

to handle large drums. Some are smaller versions of a paper roll clamp
while others may engage the upper rim of the drum, or the lower rings.
Some drum attachments are capable of picking up multiple drums at the
same time.
Prongs are specialized rod type attachments used for picking up rolls of
materials such as carpet rolls, wire and cable spools, and rolled steel, by
inserting the prong into the centre of the spool.
Fork extensions slide over the existing forks on the truck to allow longer
loads to be picked up.

Height selectors allow the presetting of certain fork heights to

correspond with rack levels. This option is most commonly used on reach
trucks working at heights above 20 ft.
Tilt control allows an operator to preset fork tilt angles.
When evaluating for specific equipment and designing for racking

configurations a decision will need to be made about the most appropriate
aisle width. For turret trucks and order selectors this is best done by the
equipment supplier. For other vehicles there is a need to balance space
savings that come from minimal aisle widths with the increased
productivity that can come from wider aisles. It is possible to divide the
warehouse and use wider aisles for faster moving product and narrower
aisles for the slow items.
Activity 2
What aisle types do you operate with in your own organisation and why?
What type of fork lift trucks do you operate with? Do they have any attachments, and
if so, why?

this section.
1. What are the three main types of storage in a warehouse?
2. Is racking always required to store pallets?
3. What racking types are available for storing pallets?
4. What equipment is available for storing small parts?
5. What racking type is used to store long loads?
6. What racking type would give greatest storage density?
7. What are the three main aisle types?
8. What factors should be considered when deciding aisle type?
9. What type of truck should be used in a VNA environment?
10. How much potentially will storage capacity be increased by moving from wide aisle to
narrow aisle?
11. As well as aisle type, what other factors need to be considered when selecting a fork lift
truck, and why?
12. What effect does adding attachments have on the forktruck’s capabilities – both positive
and negative?
13. Where should petrol/diesel fork lift trucks be used?
14. What tyre type should be used within a warehouse?


1. What are the three main types of storage in a warehouse?
palletised unit loads
small parts
long loads
2. Is racking always required to store pallets?
No.
3. What racking types are available for storing pallets?
Adjustable racking
Pushback racking
Gravity flow racking
Drive-in/drive-through racking
Cantilever racking
4. What equipment is available for storing small parts?
Carousels
Drawer systems
Carton live storage
5. What racking type is used to store long loads?
Cantilever racking
6. What racking type would give greatest storage density?
Drive-in/drive-through
7. What are the three main aisle types?
Wide aisle
Narrow aisle
Very narrow aisle
8. What factors should be considered when deciding aisle type?
Productivity
Space utilization
Flexibility
Safety
Equipment costs
9. What type of truck should be used in a VNA environment?
A turret truck or swing mast truck.
10. How much potentially will storage capacity be increased by moving from wide aisle to
narrow aisle?
20 – 25%
11. As well as aisle type, what other factors need to be considered when selecting a fork lift
truck?
Fuel type
Tyre type
Lift capacity and height
Mast options
Attachments

12. Where should petrol/diesel fork lift trucks be used?

Outdoors only.
13. What tyre type should be used within a warehouse?
Cushion tyres.

Section 3: Order Picking

Section Objectives

♦ Understand the aim and objectives of a picking operation
♦ Understand what measures should be taken to maximise efficiency in picking
♦ Know the different types of picking operation in relation to items, cartons and
pallets
♦ Know what equipment is available for picking operations
Objectives and Principles of Picking

The aim of a picking operation is “to convert products as they are held in
the warehouse to a form as required by the customer at an expected
service level and at a lowest total system cost”.
In any picking operation there will be a trade-off between the need to

stock the full range of products in as small an area as possible and holding
quantities that minimise replenishment. A balance between the two needs
to be struck.
As warehouse manager your picking operation should look to achieve the

following objectives:
♦ Minimise movement.
♦ Simple administration.
♦ Eliminate ineffective time.
♦ Lowest error rate.
♦ Fastest order turnround.
The correct balance of these will provide you with an appropriate level of
customer service at maximum productivity and minimal cost.
Of all warehouse processes, order picking tends to get the most attention;
there are generally more outbound transactions than inbound transactions,
and the labour associated with the outbound transactions is normally a big
part of the total warehouse labour budget. Another reason for the high
level of importance placed on order picking operations is its direct
relationship with customer service levels. Turning round customer orders
quickly and accurately has become an essential part of doing business.

The methods for order picking vary greatly and the level of difficulty in
choosing the best method for an operation will depend on the type of
operation itself. The characteristics of the product being handled, total
number of transactions, total number of orders, picks per order, quantity
per pick, picks per SKU (stock keeping unit), total number of SKUs and
value-added processing such as private labelling for some customers will
all need to be considered; as will whether the operation includes individual
item/piece-pick, case-pick, or full pallet-loads. In many situations a
combination of picking methods is needed to handle diverse product and
order characteristics.
Your main objective as a manager in designing an order picking operation

include increasing productivity, reducing cycle time, and an increase in
accuracy. Frequently these objectives may conflict with one another in that
a method that focuses on productivity may not provide a short enough
cycle time, or a method that focuses on accuracy may sacrifice
productivity. Again, finding the right balance for the operation is
necessary.
The design of the picking flow should be such that:
♦ The order picker ends up fairly close to the original starting point.
♦ The picking document should have the picks sorted in the same
sequence as the picking flow.
♦ Fast-moving product should be stored close to the point of dispatch and
the main cross aisle and additional cross aisles put in to allow short
cuts.
♦ Larger bulkier items would be stored towards the beginning of the pick
flow to ensure that product is not damaged.
Picking Productivity
Productivity in order picking is measured by the pick rate – the number of
items, lines or pallets picked over a given period of time, usually an hour.
Since the actual amount of time it takes to remove the product physically
from the location tends to be fixed regardless of the picking method used,
productivity gains are usually made by reducing the travel time by using
mechanisation, for example by using goods to man systems.
Cycle Time
Cycle time is the amount of time it takes to get an order from order entry
to the point of dispatch – the shipping dock. Customers’ increasing
expectations in terms of how quickly they want to receive orders has
increased the emphasis on reducing cycle times from days to hours or
minutes. Immediate release of orders to the warehouse for picking include
methods that provide concurrent picking of items within large orders thus
reducing cycle times An example being splitting an order into different
parts and giving one part each to a number of picking staff.

Accuracy
Regardless of the type of operation, accuracy is a key objective. Virtually
every decision made in setting up a warehouse will have some impact on
accuracy, from the product numbering scheme, to the design of product
labels, product packaging, the design of picking documents, location
numbering scheme, storage equipment, lighting conditions, and picking
method used. Technologies that assist in picking accuracy include pick-to-
light systems, counting scales, and bar-code scanners. Beyond the design
aspects of an order picking operation, employee training, accuracy
tracking, and accountability are essential to achieving high levels of
accuracy.
Item Picking
This is also known as piece picking or broken-case picking and is where
individual items are picked. Piece-pick operations usually have a large SKU
base in the thousands or tens of thousands of items, small quantities per
pick, and short cycle times. Mail-order catalogue companies and repair
parts distributors are good examples of piece-pick operations.
Basic Order Picking

In the most basic order picking method, product is stored in fixed locations
on static shelving or pallet racking. An order picker picks one order at a
time following a route up and down each aisle until the entire order is
picked. The order picker will usually use some type of picking cage or
trolley, or pick product directly onto a pallet.

The photograph (courtesy of Le Creuset UK Ltd) above shows basic order

picking, with customer orders being directly picked onto a pallet that is
moved by a hand pallet truck.
This basic order picking method can work well in operations with a small
total number of orders and a high number of picks per order. Operations
with low picks per order will find the travel time excessive in this type of
picking and operations with large numbers of orders will find that the
congestion from many pickers working in the same areas slows down the
processing.
Batch Picking
In batch picking, a number of orders are grouped together in batches. An
order picker will pick all orders within the batch in one run using a
consolidated pick list. Usually the picker will use a multi-tiered picking
trolley with a separate tote or carton on the trolley for each order. Batch
sizes usually run from 4 to 12 orders per batch depending on the average
picks per order in that specific operation. Batch picking systems may use
extensive logic programmed to consolidate orders with the same items. In
operations with low picks per order, batch picking can greatly reduce
travel time by allowing the picker to make additional picks while in the
same area. As multiple orders are being picked at the same time, systems
and procedures are required to prevent orders being mixed. In very busy
operations, best practice is batch picking is often used in conjunction with
zone picking and automated material handling equipment.
Zone Picking
In zone picking, the picking area is broken up into individual pick zones.
Order pickers are assigned a specific zone, and only pick items within that
zone. Orders are moved from one zone to the next as the picking from the
previous zone is completed in assembly line style (also known as "pick-
and-pass"). Usually, conveyor systems are used to move orders from zone
to zone. In zone picking it is important to balance the number of picks
from zone to zone to maintain a consistent flow to maintain productivity.
Zones are usually sized to accommodate enough picks for one or two order
pickers. Creating fast pick areas close to the conveyor is essential in
achieving high productivity in zone picking. Zone picking is most effective
in large operations with high total numbers of SKUs, high total numbers of
orders and low to moderate picks per order, such as mail-order
operations. Separate zones also provide for specialization of picking
techniques such as having automated material handling systems in one
zone and manual handling in the next.
Wave Picking
A variation on zone picking and batch picking where rather than orders
moving from one zone to the next for picking, all zones are picked at the
same time and the items are later sorted and consolidated into individual
orders/shipments. This is the quickest method for picking, but sorting and
order consolidation can prove to be difficult.

Basic Order Picking Total Orders: Low

Picks Per Order: Moderate to High
Batch Picking Total Orders: Low to High
Picks Per Order: Low
Zone Picking Total Orders: Moderate to High
Picks Per Order: Low to Moderate
Wave Picking Total Orders: Moderate to High
Picks Per Order: Moderate to High
The Table needs a tile
Item Picking Equipment

As with the picking methods, the picking equipment used will also depend
on a variety of factors.
Static Shelving
The most common equipment for storage in item-pick operations, static
shelving is designed with depths from 12” to 24”. Product is either placed
directly on the shelving or in cardboard, plastic, or steel parts bins. Static
shelving is economical and is the best method where there are few picks
per SKU or where parts are very small.
Carton Live Storage (flow rack)

Carton live storage is similar to static shelving with the exception that
rather than shelves, there are small sections of gravity conveyor mounted
at a slight angle. Product is stocked from the rear of the flow rack and
picking is done from the face. Product can be stocked in cartons or small
totes or bins. As a carton or tote is emptied, it is removed from the rack
and another one will roll into place. Carton live storage is most useful
where there is a very high number of picks per SKU.
Carousels
Horizontal carousels work on the same principle as those used at baggage
reclaim at airports, although on a smaller scale. Generally an operator will
run 2 to 4 carousels at a time avoiding the need for the operator to wait
while one unit is turning. Picking is usually performed in batches with
orders downloaded from the host system to the carousel software.
Horizontal carousels are most common in picking operations with very high
number of orders, low to moderate picks per order, and low to moderate
picks per SKU. Horizontal carousels provide very high pick rates as well as
high storage density. Pick-to-light systems are often integrated into
carousels. Vertical Carousels (similar to a small scale Ferris wheel) are
frequently used in laboratories and specialty manufacturing operations and
are rarely used in regular order picking operations.

Horizontal carousel Vertical carousel

Pictures courtesy of Remstar
Automatic Storage and Retrieval Systems (ASRS)

An ASRS is a system of rows of rack, each row having a dedicated retrieval
unit that moves vertically and horizontally along the rack, picking and
putting away loads. ASRS systems are available in mini-load types that
store and transfer product on some type of tray or in bins, and unit-load
types that transfer and store pallet loads. In addition to the automation
features, ASRS units can provide extremely high storage density with
capabilities to work in racking up to 100 feet high. Unfortunately the high
costs of ASRS equipment and the length of the retrieval times make it
difficult to incorporate into a piece-picking operation.
Picture courtesy of Rapistan
Automatic Picking Machines

Fully automated picking machines (such as A-frames) are still pretty rare
and are used only where very high volumes of similar products are picked
such as music CDs, or, where high volume in combination with high
accuracy requirements exist such as pharmaceutical fulfilment.
Pick-to-light
Pick-to-light systems consist of lights and LED displays for each pick
location. The system uses software to light the next pick and display the
quantity to pick. Pick-to-light systems have the advantage of not only

increasing accuracy, but also increasing productivity. Since hardware is

required for each pick location, pick-to-light systems are easier to cost
justify where very high picks per SKU occur. Carton flow rack and
horizontal carousels are good applications for pick to light.
Bar-code Scanners
Though very useful in increasing accuracy levels, bar-code scanners in a
fast-paced piece-pick operation tend to become cumbersome and can
significantly reduce pick rates. With proper training, tracking, and
accountability, very high accuracy rates can be achieved in order picking
without scanners. These are generally better suited to case-pick, pallet-
load, putaway and order checking operations.
Voice-directed Picking
Voice technology has come of age in recent years and is now a very viable
solution, although it is not widespread. Directions are given to staff via
head sets.
Automated Conveyor and Sortation Systems

Automated conveyor systems and sortation systems will be integral to any
large-scale piece-pick operation. The variety of equipment and system
designs is enormous.
Case Picking
Case picking operations (where numbers of the same item in carton
quantities are picked) tend to have less diversity in product characteristics
than piece picking operations, with fewer SKUs and higher picks per SKU.
The methods that can be used are similar to those outlined above for item
picking.
The basic case picking method relies on product being stored in pallet
racking rather than shelving, and cases being picked from floor locations
directly onto a pallet on a hand pallet truck.
It should be noted, though, that batch picking is rarely used because of

the physical size of the picks.
Case Picking Equipment

Pallet Rack
Pallet rack is the most common storage system for case-pick operations.
Carton Live Storage/Flow Rack

Although carton flow rack rarely applies to case-pick operations, pallet flow
rack or push-back rack can be useful.
Carousels
Although you can incorporate unit-load carousels into a case-pick
operation, it tends to be an unlikely match-up. If doing batch picking

where you have many picks per SKU and few pieces per pick you can pick
from an ASRS unit onto a unit-load carousel.
Automated Storage and Retrieval Systems (ASRS)

Unit-load ASRS systems can be useful in case-pick operations, especially if
you can provide storage heights of 40 to 100 feet.
Pick-to-light
Pick-to-light can be used in case-pick operations, however, its application
is significantly less than in piece-pick operations.
Bar-code Scanners
Bar-code scanners are frequently used in case-pick operations. Since the
time to physically pick the product is higher in case-pick operations, the
time spent scanning tends to have little impact on productivity and
therefore the accuracy benefits will usually outweigh any reduction in
productivity.
Voice-directed picking
Voice directed picking is equally suited to case picking operations.

If using zone or wave picking, automated conveyor and sortation systems
are likely to be a part of the system. In case picking, standard conveyors
may be used to transport individual cases, or unit-load conveyors used to
transport pallets.
Lift Trucks
Motorized pallet trucks, man-up order selectors, and man-up turret trucks
are the vehicles of choice for case-pick operations.
The basic motorized pallet truck is designed for the operator to walk along
with the truck to move loads and there is a stand-on version, which the
operator rides on. Stand-on machines in particular are good for moving
loads over long distances, and are fast, manoeuvrable and require little
operator training.
Motorised pallet truck

Picture courtesy of Yale

The order-picker has been designed specifically for manual handling of

less-than-pallet-load quantities in racking. The man-up design has fixed
forks attached to a platform which elevates both the load and the operator
to make manual handling easier and safer.
Man up order picker

Picture courtesy of Yale
Pallet Picking
Pallet picking involves picking of the complete pallet at once, rather than
selecting individual cases or items from it.
Basic Pallet Picking

This is the most common method for full-pallet picking, with orders being
picked at a time. The order picker will use some type of lift truck to
retrieve the pallet load and place it in a marshalling area in a staging lane
designated for that order, or just pick and load directly into an outbound
trailer or container.
Zone and Wave Picking

Pick zones can be used for pallet picking operations. The storage area is
broken into zones to eliminate multiple lift truck operators from picking in
the same aisle. The lift truck operator may pick the pallet and deliver it
directly to the designated staging lane or place it on a unit-load conveyor
that will deliver it to the sorting/staging area.
Task Interleaving
Task interleaving is a method of combining picking and putaway, where
every time an operator puts a pallet away into storage, the in-house

warehouse management system will ask for one to be picked – taken out –
to minimise the amount of empty running.
Pallet Picking Equipment

Pallet Rack
Numerous pallet rack configurations can be used in full pallet picking
operations, from standard back-to-back single pallet depth configurations
to double-deep rack, push-back rack, drive-in/drive-thru rack, and flow
rack. The best racking configuration for an operation will be based on the
total number of pallets per SKU and the pallets per pick. Trade-offs need
to be made during the selection process between storage density, picking
productivity, equipment costs, and the ability to maintain first-in, first-out.
ASRS
Unit-load ASRS units when combined with unit-load conveyors and
sortation systems can provide fully automatic pallet picking operations,
with excellent storage density.

Automated conveyor and sortation systems can be combined with ASRS
units or used in conjunction with manual picking with lift trucks in
zone/wave picking systems. Either the ASRS or the lift truck operator
delivers the pallet load to the conveyor. The conveyor system then
delivers the pallet to the marshalling area where it is either manually
sorted by lift trucks into the designated staging lane, or a sortation system
automatically sorts into a staging lane. Staging lanes can be equipped with
automated or gravity fed unit-load conveyor.
Bar-code Scanners
Bar-code scanners are very commonly used in pallet-pick operations.
Voice-directed Picking
Again, voice-directed picking is suitable for pallet picking.
Lift Trucks
The lift trucks used for pallet picking will inevitably depend on the chosen
storage configuration. Standard counterbalance lift trucks are used in bulk
floor storage and wide-aisle pallet rack storage in singe-depth, push-back,
drive-in/drive-thru, and flow rack. Reach trucks are used in narrow-aisle
storage in single-depth, double-deep, push-back, drive-in/drive-thru, and
flow rack. Swing mast and turret trucks are used in very narrow aisle
storage in single depth pallet rack.
Other Considerations
Fixed locations are a method commonly employed in picking operations
with each SKU always being stored in the same location. In any system
the fastest moving products should be located as near to the marshalling

area as possible (to minimise movement) and at the heights that are
easiest to pick from.
As a warehouse manager, you will need to review product location

regularly to ensure that popular products are located where they need to
be. Data need to be analysed to establish what the most popular lines are.
Problems do arise if this process is carried out too often because of the
operational disruption it can cause; moving products from location to
location can often negate the benefits gained from the repositioning
exercise, particularly if there are few free locations. In random storage
operations, a warehouse management system (WMS) system can direct
fast-moving stock to the closest available location to the optimum pick
point.
Replenishment systems need to be put in place to move products to the

fixed picking locations as inventory levels drop to a predetermined figure
to ensure that picking locations are not empty when warehouse staff go to
pick a particular item, as this could impact negatively on productivity.
Prior to actual order dispatch, you also need a checking process to be put
in place to ensure that what is required is actually being dispatched. This
can vary from a simple look at the order to see if it looks right to more
complex check-weighing or scanning.
Once stock has been picked and consolidated into the customer’s order, it
may be packed in a carton if the quantity is small, and shipped via a parcel
carrier. Larger consignments can be placed on pallets and stretch wrapped
to hold the order together before transporting. This will increase security,
especially if sealed with security tape.
Semi automatic stretch wrapping machine.

Picture courtesy of Strapex

Activity 3
What type of picking do you use in your operation, and why?
Describe basic order picking for items

this section.
1. What should be the aim of a picking operation?

2. How is picking productivity measured?
3. What is cycle time?
4. What measures help improve picking accuracy?
5. How should the design of the picking flow be organised?
6. What factors need to be considered when selecting picking methods?
7. What types of picking are there?
8. What equipment is available for item picking?
9. What would be the most appropriate picking method if there were a high number of
SKUs, with a low volume per SKU ?
10. In what type of operation would basic order picking be best?
11. What are the benefits of batch picking?
12. How does wave picking differ from zone picking?
13. What is pick to light?
14. What is task interleaving?

1. What should be the aim of a picking operation?
“To convert products as they are held in the warehouse to a form as required by the
customer at an expected service level and at a lowest total system cost”.
2. How is picking productivity measured?
By the pick rate – the number of items, lines or pallets picked over a given period of
time, usually an hour.
3. What is cycle time?
The amount of time it takes to get an order from order entry to the point of dispatch.

4. What measures help improve picking accuracy?

Design aspects
Technology
Training
Monitoring
5. How should the design of the picking flow be organised?
The order picker ends up fairly close to the original starting point.
The picking document should have the picks sorted in the same sequence as the
picking flow.
Fast moving product should be stored close to the point of dispatch and the main cross
aisle and additional cross aisles put in to allow short cuts.
Larger bulkier items would be stored towards the beginning of the pick flow to ensure
that product is not damaged.
6. What factors need to be considered when selecting picking methods?
The characteristics of the product being handled.
Total number of transactions.
Total number of orders.
Picks per order.
Quantity per pick.
Picks per SKU.
Total number of SKUs.
Value-added processing.
Whether piece-pick, case-pick, or full-pallet picking is required.
7. What types of item picking are there?
Basic order picking.
Batch picking.
Wave picking.
Zone picking.
8. What equipment is available for item picking?
Static shelving.
Carton live storage (flow rack).
Carousels.
Automated storage and retrieval systems (ASRS).
Automatic picking machines.
Pick to light.
Bar code scanners.
Voice-directed picking.
Automatic conveyor and sortation systems.
9. What would be the most appropriate picking method if there were a high number of
SKUs, with a low volume per SKU ?
10. In what type of operation would basic order picking be best?

When there are a small total number of orders and a high number of picks per order.
11. What are the benefits of batch picking?
It greatly reduces travel time by allowing the picker to make additional picks while in
the same area.
12. How does wave picking differ from zone picking?

Rather than orders moving from one zone to the next for picking, all zones are picked
at the same time and the items are later sorted and consolidated into individual
orders/shipments.
13. What is pick to light?
Lights and LED displays at each pick location display the next pick and quantity
to pick.
14. What is task interleaving?
A method of combining picking and putaway.

Section 4: Inventory Issues

Section Objectives

♦ Identify the reasons for holding stock
♦ Understand the costs associated with holding stock
♦ Understand what steps should be taken to improve inventory accuracy
♦ Know how to set up a stock check, and what the alternative is
Why Hold Stock?

There are several reasons for holding stock:
♦ Cost of purchasing. The more orders that are placed, the greater the
costs in terms of administration. Typically suppliers offer greater
discounts the larger the order.
♦ Variability of demand. Stock needs to be carried to avoid stock outs.
♦ Variability of supply. Suppliers’ lead times can vary (the time from
receipt of an order to delivery).
♦ Speculation. Stock is sometimes purchased against anticipated price
rises, industrial action, sudden demand changes and so on.
♦ Work in progress. Semi-finished stock moves between different
sections of the manufacturing process.
♦ Economies of production. Low unit production costs are achieved
through long production runs, which inevitably results in short term
inventory peaks. A balance needs to be struck between stockholding
costs and production economies.
♦ Costs of not holding stock. This includes the cost of losing customers
if stock is not available.
Stockholding Costs
The cost of holding stock varies from industry to industry, and from
business to business. Martin Christopher states that “It is estimated that in
total it (inventory) costs a minimum of 25 percent per annum of the book
value of inventory just to hold it” 2 The cost of holding stock is made up of
two main elements – the investment in the inventory and the storage
costs.
2
Logistics and Supply Chain Management, Martin Christopher, Pitman Publishing 1998. p81

There are a number of costs associated with holding stock:
♦ Cost of working capital/opportunity cost. If a company needs to

borrow money in order to purchase stock, then interest needs to be
paid on the loan. If borrowing is not required in order to buy stock, but
there are borrowings elsewhere in the organization, then any reduction
in inventory could free money to help pay off these loans. If a company
is not reliant on loans to fund stock purchases, then it needs to look at
how much money could be made if the money used to purchase stock
was invested in something else instead – the opportunity cost.
♦ Staff wages
♦ Equipment costs (racking, fork lift trucks etc)
♦ Heating, lighting, water
♦ Rent
♦ Rates
♦ Insurance. These costs are directly related to stockholding. The higher
the stocks, the greater the premium that has to be paid.
♦ Repairs and maintenance
♦ Shrinkage (theft)
♦ Deterioration
♦ Depreciation
♦ Obsolescence. Stock may become obsolete if stored for too long,
especially in fashion or technology where change is rapid.
Overflow storage areas need to be considered when calculating total

storage costs, including any movement to and from these locations, and
associated administrative costs.
Because of the high costs of holding inventory, policies should be adopted

by the organisation to minimize the amount of stock held.
Inventory Accuracy
If an organisation is having problems with inventory accuracy, it is often
assumed that the introduction of new technology such as bar-coding, or
pick-to-light will solve the problems. It is possible for technology to reduce
errors, but not eliminate them altogether. As a manager, your
organisation’s focus should be on the basics first.
Attitude
Maintaining inventory accuracy must be an integral part of your attitude
and of your organisation. Like quality, customer service, and plant safety,
accuracy must be promoted throughout the organization as everyone's
responsibility. Processes are often shortcut if they impact on short term
productivity and profitability. In the long term, this will reduce an

organisation’s ability to service its customers to expected levels, and could

result in losing customers.
Defining the Process

As an inventory manager you must define clearly the processes in an
organisation that affect inventory. Each of these processes can then be
evaluated to find out where and why errors occur, and steps taken to
correct them. Formal checks can be put in place at critical points to reduce
problems. Input is required from all areas within the organisation to gain a
complete understanding.
Procedure Documentation
The processes and procedures within them should be written down, once
identified, and staff advised that they must follow them. The
documentation should be as clear and comprehensive as possible and it
should be written for a specific task within a specific job responsibility, it
should include everything the employee needs to know to complete the
task. Good practice requires that procedures should also include the
correct method for filling out and processing paperwork, the sequence and
timing of entering data, and any checks that are required to be performed.
If there are any exceptions to a procedure they should be specified in the
document, allowing undocumented exceptions to a procedure will decrease
its effectiveness. Once the documentation is complete, it should be
passed initially to a few key employees and monitored to see if anything is
missing or incorrect. Once this is done, it can be passed to all staff.
Employee Training
Again as a manager it is important that you set time aside to go through
the processes with staff to ensure they have a thorough understanding of
what needs to be done for each documented task. Revisions to procedures
should take place periodically, but not too often as this can cause
confusion.
Employee Testing
Employees should be tested to ensure they understand what is required of
them. Those you have identified as not having understood properly must
be retrained.
Monitoring
Any actions observed which do not comply with the written procedures
must be addressed immediately with the employees involved.

Standards
Setting standards requires tracking of the accuracy and productivity of the
tasks being performed which makes it more viable when there are a
number of people performing the same tasks. Standards need to be
enforced, but should be set at reasonable levels, after researching what
these should be. They can always be raised later.
Tracking Accuracy
There is a need to track accuracy both organizationally (as a total) and
individually by person. Accuracy tracking should always be measured as a
percentage of total transactions, and should be communicated to staff as a
way of improving the operation, not trying to find fault.
Accountability
People must be held accountable for following documented procedures. If
someone is not following the procedures you as a manager must deal with
this using appropriate disciplinary action. People will always make
mistakes, but they should at least be following procedures.
Count
Inventory will need to be counted to determine accuracy, although reports
from customers relating to short shipments should quickly help to identify
problem areas. Year-end stock checks are tools used by accountants, but
do little for inventory accuracy. Stock needs to be counted more regularly
to be useful, and this can be achieved with cycle counting. This is where
the SKUs are split by popularity, and more popular SKUs are counted, say,
10 times a year. Medium SKUs could be counted 5 times, and the slow
movers twice a year. A number of SKUs could be counted each day as part
of normal warehouse procedures.
Re-evaluation
You should ensure that processes and procedures are regularly re-
evaluated.
It is often difficult to change the attitudes of staff to the importance of

inventory accuracy.
Other factors that can assist in improving inventory accuracy are:
♦ Dedicated positions for managing inventory. It is easier to

manage staff that are direct reportees.
♦ Control employee turnover. Dave Piasecki states that “My experience
shows a new employee generally makes 2 to 5 times as many mistakes
as a one-year employee and 5 to 10 times as many mistakes as a five-

year employee.” 3 High turnover also results in short-staffed operations

that are more error-prone. Staff frequently falling short of standard,
even after retraining, should be dismissed or reassigned, but it should
be remembered that it is costly to recruit new staff so it may be
preferable to pay more to keep staff.
♦ Storage areas. How product is stored affects accuracy. Crowded
unorganized areas become “black holes” for missing product. Crowded
areas also cause increase damage to product that is then often disposed
of without inventory corrections being made. High-density storage
makes it very difficult to count the product accurately. Maintaining
proper lighting, shelf and product labelling, and organization makes it
easier to stock, pick, and count product thus increasing levels of
accuracy.
♦ Know the inventory system. The more staff are informed about
how the inventory system works, the more success there will be in
optimizing its features and the way it works.
Stock Checks
Good practice in most organizations is to carry out a stock check at least
once a year. This is a process where all the stock held by the company is
counted and compared to what stock records say should be held.
Variances can be investigated and corrections made if necessary.
The process should be a simple one, but all too often takes companies far
too long because of inadequate preparation and training of staff involved.
If too much time is taken, then customer service levels will be affected as
no stock can be moved over this period.
It is necessary to identify the best time to carry out a stock check. This will
almost inevitably be at year end (at least), and could probably be also held
after the first half of the year. Care should be taken to conduct the stock
check at a time that causes minimum disturbance to the business and any
adverse impact on customer service levels. Many companies in the UK
count stock between Christmas and New Year, a time when the peak
period is over. Mid-term counts are often conducted at weekends.
You must ensure that sufficient staff is available to count the stock in a
given period, and to enter data on to the computer system.
All receipts should have been entered into the computer system before the
count takes place, and preferably put away into locations in the
warehouse. Any damages must be written off. Staff (and customers and
suppliers) should be made aware of the fact that no product will be
received nor any stock picked or shipped during the period of the stock
check.
3
Inventory Accuracy: People, Processes and Technology, Dave Piasecki.. Ops publishing 2003

A map or list of all locations should be drawn up, and staff nominated to
count particular areas. The count itself needs to be drawn-up to suit the
operation. Some organisations physically count stock in picking locations
and take information from flagged pallets that have not been touched
since receipt to reduce the time taken. Some count everything irrespective
of location. Counting at height requires safety cages to be used if specialist
high-level order pickers are not available, or the stock is not to be brought
to floor level to be counted.
A two-part stock count ticket is a simple yet efficient way to conduct the
count itself. This ticket has a unique identification number printed on it, as
well as blank spaces for item number, warehouse location and quantity to
be filled in by the counting staff. This is known as a blind count. Tickets
can be produced listing what is supposed to be in particular locations, but
human nature is such that the easy route is often taken, and the ticket
figures taken as being accurate if there is any ambiguity. When the count
is actually underway, one part of the ticket should be affixed to the
product in the location being counted, and the other handed in to staff to
be keyed. This gives a visual indication that stock has been counted.
A note should be made of the ticket numbers given to particular counters
in a particular area, and all tickets handed back in once completed, even if
the tickets have been spoilt. This will enable checks to be properly
conducted at a later stage. It is possible to produce just one ticket per
location and check these off once returned to ensure that nothing is
missed.
Once the physical count has been completed, all tickets handed in and
checks made to establish no tickets/locations have been missed, the count
needs to be keyed onto the computer system being used. This can often
take place concurrently with the physical count to minimize the time
taken. Once this has been completed, a variance report should be
produced comparing what the stock records in the inventory file on the
computer system say should be available against the actual count.
The variances can be checked either in financial terms or the number

counted, again dependant on the operation. It is important not to spend
too much time investigating the reasons why there is a large numerical
variance in the number of washers with a low financial value, for instance,
and not investigate the low numerical difference in more valuable items.
The importance of differences may not be immediately apparent, however.
The washers may be used in a production process that could grind to a
halt if insufficient numbers are available and this could ultimately be very
expensive.
It is important to establish tolerances for the stock check. Many

organisations use a 0.5% marker, and if the total stock difference is within
this, either positive or negative, then that is acceptable.

Differences in the physical count and the stock file can be down to any
number of reasons, and include:
♦ Inaccurate counting.
♦ Inaccurate keying of stock counts.
♦ Stock incorrectly receipted.
♦ Stock incorrectly shipped.
♦ Shrinkage.
Corrections need to be made to the stock file on completion of the stock

check to ensure that the file now reflects reality.
Cycle counting (perpetual inventory).
This is a process that can be used to avoid the company having to suspend
operations whilst stock is counted. Cycle counting is the regularly
scheduled count of products, normally daily, based on some predefined
parameters. Inventory can be broken down by ABC classification, and each
classification of product assigned a count frequency. The more important
class A items may need to be counted 10 times a year, B items 5 times,
and C twice for example. A number of SKUs will be counted as part of daily
routines by fully trained staff, and any variances investigated. It should be
remembered that this system is useful if the inventory is accurate at the
outset, but is a system that is checking stock records that exist on the
stock file and so is unlikely to turn up anything that has been overlooked,
for instance stock that has not been booked on.
Activity 4
How does your organisation count stock?
What is an alternative to stock checking, and how does it work?

this section.
1. Why do companies hold stock?

2. What is the estimated cost of holding stock?
3. Explain the cost of working capital
4. What is the opportunity cost?

5. How can inventory accuracy be assessed?

6. How can staff turnover affect accuracy?
7. How can storage areas affect accuracy?
8. What is a stock check?
9. What are the main reasons for differences between a physical count and the stock
file?

Section 4: Knowledge Check – Answers

1. Why do companies hold stock?
Cost of purchasing.
Variability of demand.
Variability of supply.
Speculation.
Work in progress.
Economies of production
Costs of not holding stock.
2. What is the estimated cost of holding stock?
A minimum of 25 percent per annum of the book value of inventory.
3. What is the opportunity cost?
The amount of money that could be made if the money used to purchase stock was
invested in something else instead.
5. How can inventory accuracy be assessed?
As a percentage of total transactions.
6. How can staff turnover affect accuracy?
High turnover results in short-staffed operations that are more error prone and new
employees make more mistakes.
7. How can storage areas affect accuracy?
It is easy to lose product in crowded, unorganized areas. Crowded areas also cause
increased damage to product that is then often disposed of without inventory
corrections being made. High-density storage makes it very difficult to count the
product accurately.
8. What is a stock check?
A process where all the stock held by the company is counted and compared to what
stock records say should be held.
9. What are the main reasons for differences between a physical count and the stock
file?
Inaccurate counting.
Inaccurate keying of stock counts.
Stock incorrectly receipted.
Stock incorrectly shipped.
Shrinkage.

Section 5: Service and Administration

Section Objectives

♦ Explain what factors affect customer service
♦ Understand the costs of service level provision
♦ Explain the different processes within a warehouse and the associated paper
flows
♦ Explain what methods can be used to evaluate performance in a warehouse
Service Quality
In an increasingly-competitive business environment, service levels have
been continuously improving over time. The level of service provided is
normally reflected in the cost of the operation. The better the service
provision the higher the costs.
Source – Martin Christopher – Logistics and supply chain management
This steep curve is accounted for largely as a result of the large stocks
that would need to be held to ensure there were no stock-outs if demand
became unexpectedly high. It is possible to see that costs increase
disproportionately the closer service levels approach 100%. Decisions

therefore need to be made as to what is acceptable and what is

achievable.
Customer service should be company-wide. It should have been developed
at the strategic level, and then translated into operational efficiencies.
Martin Christopher has identified that customer service is determined by

the interaction of all those factors that affect the process of making
products and services available to the buyer. This includes:
♦ Order cycle time – the time from receiving an order to delivering it.
♦ Consistency and reliability of delivery.
♦ Available stock.
♦ Order size constraints, such as minimum order quantities.
♦ Ordering convenience – how easy it is for the customer to place an
order.
♦ Delivery times and flexibility such as speed and booking deliveries.
♦ Invoicing procedures (such as payment terms – 30 days, 60 days etc)
and accuracy.
♦ Claims procedure – if stock is missing from a delivery, how the
organisation deals with it.
♦ Condition of goods.
♦ Visits by sales people – more visits are better.
♦ Order status information.
It can be seen that although not all of the above is affected by warehouse
operations, a significant section is, highlighting the importance of the part
that the warehouse has to play.
The Concept of the “Perfect Order”

The aim of any operation has to be to deliver service excellence in a
consistent and cost effective way. A way in which this can be measured is
with the notion of the “perfect order”. This would be achieved when a
customer’s requirements were met in full. A perfect order would be on
time, in full (OTIF). This concept can be further developed to include error
free. Statistics should be kept over time, and the actual service level can
be calculated by multiplying the elements. For example, if 90% of orders
were on time, 80% of orders were in full, and 70% were error free, then
the percentage perfect order achievement would be:
90% × 80% × 70% = 50.4%
Pareto Law (80:20 rule)

This is a rule (named after a 19th century Italian economist) that has been
shown to fit most organisations in a number of different relationships. For
example, it has been established that 80 percent of an organisation’s

profits come from 20 percent of its customers or that 80 percent of the

costs of any customer service programme will be generated by only 20
percent of its customers. It is therefore important to identify the
profitability of all customers, and then take steps to improve it.
After some analysis of the organisation’s current profitability position, it

may be found that there are opportunities to enable the same level of
service to be provided to customers at lower cost. Faster production and
faster shipping methods are two examples of this.
If improving customer service costs more than the actual sales generated
as a result of the improved policy, then there should be questions asked
about whether it is worthwhile pursuing.
Source – Martin Christopher – Logistics and supply chain management
There is a limit to the impact that any customer service level

improvements can have on the volume of orders that customers place
before diminishing returns set in – that is, when the increase in sales
revenue will be less than the amount spent on the improved service.
Pareto can form the basis for developing a service strategy – giving better
service to better customers.
Administrative Processes
The main administrative processes within a warehouse are concerned with
incoming stock, movements of stock and shipments of stock out of the
warehouse.

Flow chart to show administrative processes within a warehouse.
A customer may place an order for an item, or a number of items via a

number of different possible mechanisms. One of these is EDI (electronic
data interchange), where the information is transmitted electronically to a
postbox from where it can be retrieved by the organization and then keyed
onto the computer system used for sales order processing. It may well be

that this process is fully automated and is linked directly to the

organization’s computer system, eliminating the need for keying and
minimizing the opportunity for error. Orders can also be sent by more
traditional methods such as fax, phone or post.
Dependant on the customer’s delivery requirements – the customer may

well be placing an order for delivery some time in the future, for instance –
the system will check stock availability, to see if there is sufficient stock in
the warehouse to satisfy the customer’s order. If there is, then stock will
be allocated to this order meaning that it will no longer be available for
other orders. This is obviously not a problem if sufficient quantities of
stock are held. If there is not enough stock, then either the stock that is
available may be allocated, (and backorders held that will allocate against
stock when it does become available) or the order held until all stock is
available. This policy will usually depend on the customer’s specific
requirements.
Once stock is allocated, a picking note will be raised. This is an internal

document that lists the customer stock requirements in picking sequence –
the order in which the items should be picked to minimise travel distance.
Each product in the warehouse should be assigned a particular location.
This can be either a fixed or random location, but it must be recorded on
the computer system to ensure picking is efficient, and staff are not
wasting time looking for where stock is held, and even making mistakes in
the picking process. The most usual method is to have bin (picking)
locations for items held on the inventory file (particularly if computerized
warehouse management systems are not used). The physical locations
should then be marked on the racking itself.
The number of picking notes produced each day need to be sorted by the
warehouse management team to ensure that not only are orders
processed according to the customer’s delivery expectations, (and also
internal standards), but that the workflow is smoothed as much as
possible to minimize the resource required. Any additional processing
required, such as ticketing for customer orders, needs to be considered at
this stage.
Whilst the order is being picked, the picker should annotate the picking
note to show that the items have been picked in the right quantities, and
on completion, it should be signed by the picker and filed in case any
query should be raised about it at a later date. Any checking of the order
should be conducted at this stage. This can be through using scanning
technology or manually checking against the order.
Once complete, the order should be confirmed as picked on the system.

This will then move the stock from the picking location to the marshalling
area. This is the stage when any necessary additional ticketing or
packaging can take place. Dependant on the method of picking used, this
is also the stage where other items that may have been picked for this
particular customer can be consolidated (e.g. zone picking). Once any
additional processing has taken place, the order can then be packed ready

for shipment. This will vary according to the method selected for dispatch
and the size of the order. Smaller orders may well be boxed and sent out
via a parcel carrier such as Parcelforce or TNT, whereas larger orders may
be palletised and sent out using a parcel carrier, haulier or in-house
transport operation.
Whether you use a third-party or in-house transport operation, there will

be a requirement to document the dispatch. This will either be by a
manual system – writing out a delivery docket (and retaining a copy for
records), or, as is increasingly common, using an automated system that
links with the carrier’s own system. This will record the delivery address to
which the consignment is being dispatched, the weight, number of
cartons/pallets, date and service type (next day, three day etc). Labels will
also need to be attached to the cartons/pallets, with an internally
generated dispatch note if applicable. With systems such as these,
providing they are fully integrated with the organization’s own systems, it
is possible to send advance notification of dispatch to the customer saying
how and when the consignment was shipped. This can include a URL link
to the carrier’s own web site along with a tracking number that will allow
the customer to track the delivery. Proof of delivery can also be requested
using this method. If the system used is manual, then if there is a query
on a consignment, it would be necessary to dig out consignment details
from the filed dockets, and a request put in to the carrier. It may be
necessary to book the delivery with the customer prior to shipping to
ensure delivery will be convenient.
At the time the consignment is shipped, your organisation’s own system

needs to be addressed to record shipment. This in turn will print an invoice
that can then be sent to the customer. This could either be sent
electronically or by hard copy. It is at this stage that the stock files are
updated, and the items shipped removed from stock.
At the same time that stock is being shipped out, your warehouse is also
dealing with stock coming in from suppliers or your own manufacturing
facility. Orders will have been placed according to company inventory
policy and will be received dependant on lead time – the time it takes for
a supplier from receipt of an order, to manufacture and deliver stock to
the customer.
Where there are a number of orders outstanding with suppliers at any one
time, it is important that attempts are made to smooth the flow of stock
into the warehouse to minimise resource requirements (for unloading and
put away), but without compromising company targets on order fulfilment.
A booking-in system is invaluable to ensure an even work flow.
As the stock is unloaded, it should be sorted by SKU, as there will probably

be a number of different SKUs on order from one supplier. The stock
should then be compiled into the appropriate unit load, and a label
attached denoting item number, quantity and date received. This process
is known as flagging. Dependant on the warehouse management system
being used, this could just be a handwritten label. If the WMS is more

sophisticated, this could involve generating a computerised label as

product is scanned. The delivery documentation should be checked to
ensure that what has been received is what has been advised by the
supplier. Any discrepancies should be noted.
The stock received should then be keyed onto the main inventory system
to update stock records. This is normally done against a goods received
note (GRN) that can then provide an audit trail. This will match-up receipts
against purchase orders that have been raised for the stock. Any
discrepancies from the delivery documentation should be notified to the
supplier, normally via the generation of a debit note that will reflect the
difference between the delivery note (invoiced quantity) and actual
receipts. It is important to contact the supplier quickly, as companies often
have set time limits within their terms and conditions of business after
which claims will not be entertained.
After being flagged, product can then be put away into pallet or shelf
locations within the warehouse. This should be reflected on the WMS, with
records made of what is put where. Again, this can be either on a manual
or computerised basis.
Any movements from location to location within the warehouse should also
be recorded to ensure stock records are accurate.
Other areas that will need to be accommodated within the administrative

processes may include:
♦ Stock checking.
♦ Quarantine/QC – if product is inspected within the warehouse then it
needs to be quarantined (made unavailable), and only put into stock
once tests have been passed.
♦ Returns – product coming back needs to be evaluated to determine.
why. It may be a quality problem, in which case it will need to pass
through the QC process or it could even be stock incorrectly delivered
which can be returned to stock.
♦ Damaged/broken stock – damages within the warehouse need to be
written off.
♦ Stock transfers – this could be moving stock from one warehouse to
another, for example.
♦ Frozen stock – stock can be reserved for certain customers by being
frozen, and therefore unavailable to others.
♦ Kitting – this is where a number of items are put together to form a
set.
♦ Ticketing – processes need to be in place to ensure sufficient tickets
are available for customer orders.

Performance Measurement and Control

Competitive pressure in business is ever increasing, and operations need
to constantly look for ways to improve efficiency. Many companies do not
have immediate access to up-to-date information that is required to make
business decisions quickly and avoid problems escalating. Performance
measurement is increasingly becoming the mechanism for providing this
capability.
It is important to resource operations properly, calculating how many staff

are required in each area of activity. Once these are in place, it is then a
question of measuring their performance in that task in order to establish
whether further training is required, more staff need to be recruited or
staff numbers reduced. It is possible to look at the activities an operation
will be performing in each area to establish staffing requirements.
Containers received per week, orders processed per week, lines processed,
items processed, pallets stored – all these, and many more, give an
indication of staffing levels needed. It is possible to calculate what an
individual can accomplish in any area, and then divide this by the work to
be done in that area. For example, if the operation will be receiving 20
containers a week, and it takes 3 staff 5 hours on each occasion to unload
a container by hand, then it will take a total of 3 × 5 × 20 hours to unload
containers – 300 hours a week in total.[If staff work 35 hours per week
(excluding rest breaks), then this particular activity will need 8.57 staff].
This will obviously need to be rounded up to 9, but additional work can be
found to take up the slack.
There is a need to manage the total distribution activity as a complete

system, as decisions taken in one cost area will impact on others. Cost
reduction measures introduced in one area in isolation could well increase
costs in another area. An example of this would be that changes in a
company’s policy on minimum order values may influence customer
ordering patterns, or changes in production schedules to improve
production efficiency may result in fluctuations in finished stock availability
and impact on customer service.
There are a number of ways of evaluating performance within a

warehouse. The 5 main methods are as follows.
Key Performance Indicators [KPI’s]

Critical success factors for each operation in the warehouse need to be
identified, along with an appropriate unit of measurement. The results for
each factor over a given period can then be compared against a standard
to evaluate performance. Reasons for any variation can then be considered
and remedial action taken as necessary.
It is important not only that the KPIs used within a particular area have
relevance for all staff working within that area, but that the data can be

gleaned relatively easily. Computer systems should really be used to avoid

unnecessarily high labour input.
Examples of KPIs are:

♦ Items picked per man hour.
♦ Number of pallets putaway per man hour, per day, per week, per
month.
♦ Number of containers received.
♦ Number of orders dispatched.
Service Levels
Both operational and inventory service levels need to be set in conjunction
with customer service requirements, normally in relation to a time period.
An example of this would be that all customer orders should be turned
round within 5 days from receipt, and the stock should be dispatched
using a guaranteed 48-hour delivery service.
Operating Costs
Expense budgets are drawn up by companies at the beginning of a given
period, and these should then be broken down into cost centres which
should then become the responsibility of the relevant departmental
manager. These should include all the elements within that department,
such as labour, overheads, and maintenance.
A typical budget could be broken down like this:

Unit costing can then be “pulled-out” from the budget and used for control
purposes, making comparisons and assessing alternative methods. The
budget can be compared with actual costs and unit costs calculated, for
example, a budget of x would allow for a certain number of pallets being
stored. If the actual costs show more than x, then this may well be
because more pallets are being stored than budgeted for.
Unit costing could relate to the number of pallets stored, the number of
trucks received and unloaded, the number of truckloads dispatched, the
number of orders processed, or units picked for example. Whatever
measure is used, it must be understood by those working within the group
and be shown to be accurate.
Productivity Measurement
This is similar to unit costing, but is considered at two levels, the macro
and the micro. The so called “helicopter view” of the macro level would
generate information such as:
♦ Total operating expenses as a percentage of the total sales value of

orders processed.
♦ Total operating expenses as a percentage of the total sales value of
goods dispatched.
These measures are very useful for indicating trends.
At the lower micro level, the information would be more detailed, and
could include:
♦ the number of pallets put away per hour.

♦ the number of units picked and packed per hour.
♦ the number of invoices processed per hour.
♦ the cost per delivery made etc.
The results would need to be compared with the standard, and any
variations analysed.
Benchmarking
This is the process of comparing one operation with another in order to
establish whether the organization is performing well or not in a number of
areas. Operations being compared (partners) should be carefully chosen,
as no two organizations are completely alike, and this could lead to some
confusing analysis. One method sometimes used is to compare an
organisations processes and performance with industry best-practice to
see whether improvements could be made.

Activity 5
Identify where customer service improvements could be made in your organization
without disproportionately increasing costs.
What is the 80:20 rule, and how do you think it could be used to improve customer
service?
What performance measures do you use in your organization, and why?
Can you think of any potential partners for benchmarking with your own operation,
and why would they be suitable?

this section.
1. What is the limit to the level of customer service that a company should provide?
2. What are the factors that affect customer service as viewed by the customer?
3. How is the perfect order defined?
4. How can customers place orders?
5. What system should be implemented for smoothing inbound deliveries?
6. What should the process be on receiving goods?
7. What tools are available to measure performance?
8. Why should performance be measured?
9. Give some examples of : a – KPIs
b – Unit costs
c – Productivity


1. What is the limit to the level of customer service that a company should provide?
When the cost of increasing customer service exceeds to revenue that it generates.
2. What are the factors that affect customer service as viewed by the customer?
Order cycle time.
Consistency and reliability of delivery.
Available stock.
Order size constraints, such as minimum order quantities.
Ordering convenience.
Delivery times and flexibility.
Invoicing procedures and accuracy.
Claims procedure.
Condition of goods.
Visits by sales people.
Order status information.
3. How is the perfect order defined?
A perfect order would be on time, in full (OTIF).
4. How can customers place orders?
Fax, phone, post or EDI.
5. What system should be implemented for smoothing inbound deliveries?
Deliveries from suppliers need to be telephoned, faxed or e-mailed to a responsible
individual or specialist booking-in office in advance so that a mutually convenient
delivery time can be arranged.
6. What should the process be on receiving goods?
Check delivery documentation against goods received; sort by SKU; compile
into the appropriate unit load; label with item number, quantity and date
received; key onto the main inventory system to update stock records; put
away and update WMS.
7. What tools are available to measure performance?
KPIs; service levels; operating costs; productivity measurement; benchmarking.
8. Why should performance be measured?
To establish staffing levels and training needs.
9. Give some examples of: a – KPIs
b – unit costs
c – productivity
KPIs Items picked per man hour; number of pallets put away per man hour,
per day, per week, per month; number of containers received; number
of orders dispatched.
Unit costs Number of pallets stored; number of trucks received and unloaded;
number of truckloads dispatched; number of orders processed or units
picked.
Productivity Number of pallets put away per hour; number of units picked and
packed per hour; number of invoices processed per hour; cost per
delivery made.

Section 6: Waste Management

Section Objectives

♦ Understand why packaging is used
♦ Know what legislation requires producers to do with waste
♦ Appreciate the business benefits of minimising waste
♦ Explain some methods for reducing waste
Different laws relating to waste management will apply in different

countries. This section deals with the law as it relates in the UK, but the
principles of waste management to improve efficiency can be applied
universally.
Packaging and Legislation

Product packaging is used for a number of reasons:
♦ It enables products to be stored and stacked together.

♦ It provides protection from damage.
♦ It provides protection from pilferage.
♦ It can be used to advertise the product.
♦ It can be used to display product information.
The majority of packaging is used solely whilst a product is being moved

from the point of manufacture until it reaches the final consumer. At this
point it is thrown away. Environmental legislation has been passed in the
UK in order to control packaging waste – forcing manufacturers to review
their packaging needs and where they do produce packaging above certain
thresholds they will have an obligation to recover and recycle against set
targets. This legislation applies to all companies whose turnover is greater
than £5 million and who handle more than 50 tonnes of packaging per
year.
The Producer Responsibility Obligations (Packaging Waste) Regulations

1997 implement an EC directive (94/62/EC) that requires, by 2001, that
each member state should recover between 50 and 65% of packaging
waste, and recycle between 25 and 45% of it. The responsibility for
achieving these targets is shared by all elements of the packaging chain
known as producers, and these companies need to register with the
Environment Agency, arrange for the recovery and recycling of waste

packaging and supply a certificate of compliance. Producers can either

carry out these obligations themselves or they can register with
compliance schemes who take on the obligations. Valpak is one such
organization in the UK.
The Environment Agency has been given powers that enable them to audit
an organisations compliance, which needs to be fully documented.
Companies that do not comply can be prosecuted.
Besides being an altruistic goal, it is now very sensible to attempt to

reduce not only the amount of packaging waste that is produced in an
operation, but waste generally. Government statistics state that 400
million tones of waste are produced every year in the UK, and 75 million
tones are created by businesses alone. 4
Despite the introduction of legislation, the amount of waste discarded is

continuing to grow. Although up to a third of business waste is recycled,
over half is still disposed of in landfill sites. This is resulting not only in
environmental damage through the generation of methane, but it is
wasting valuable resources that could be recycled.
The government is therefore planning to increase the costs faced by

companies with regard to waste disposal at landfill sites. In April 2003,
landfill tax was £14 per tonne, and this is likely to rise by £3 per year until
the cost reaches £35 per tonne. The European Union has also introduced
new Directives to deal with the disposal of waste electrical and electronic
equipment and restricting hazardous substances used in the manufacture
of electrical and electronic equipment. These directives are designed to
encourage manufacturers to reuse and recycle rather than throwing away.
Manufacturers will be required to foot the cost of collecting and recycling
products they make or sell. The government’s waste strategy document
(2000) for England and Wales aims to reduce landfill waste to 85% of
1998 levels by 2005.
Some products are now banned from landfill sites, and everything except
inert waste will need to be treated in some way before it can be sent to
landfill. This may be a physical, thermal, chemical or biological treatment
to reduce not only the volume of material, but also reduce the hazardous
nature of the waste. This will apply to all hazardous waste from July 2004
and all other waste from July 2009. These tighter controls should have the
effect of motivating companies to reduce their waste production.
Minimising Waste
Companies need to embrace methods for minimising waste in order to
control costs. Companies should evaluate all work processes and activities
to identify types and volumes of waste being created. Types of waste can
be anything from used lubricants to waste paper. Most typical warehouse
4
Source: Storage, handling and distribution magazine, July 2003 page 22

operations will find that the bulk of waste will be in the form of cardboard
boxes, stretch wrap polythene, polythene tape, plastic strapping, plastic
bags and polystyrene or paper-based void fill material.
Good practice to prevent or reduce waste should include the following:

♦ Proper maintenance programmes to ensure equipment is working
efficiently.
♦ Turning off machinery, water, lights, heat etc when it is not required.
♦ Using low-energy light bulbs and targeted lighting at workstations.
♦ Installing drip trays to prevent spillages.
♦ Using mechanical methods for cleaning instead of solvents.
♦ Eliminating unnecessary packaging.
Your organisation could include the following recycling waste measures:

♦ Segregating and re-using waste paper. Quite often old performance
reports printed on A4 paper could be used for pallet labels or shredded
to produce void fill packaging material. Specialist waste processing
companies will collect properly segregated paper waste.
♦ Selecting easily recyclable material.
♦ Reusing and recycling waste solvents.
♦ Using plastic liners with drums carrying waste materials to permit their
reuse.
♦ Reducing packaging weight to a minimum. This can be achieved by
looking at what packaging is actually required on a product to ensure
that it can be easily transported and safely.
♦ Use multi-trip packaging – for instance plastic totes or pallets that can
be used many times. There needs to be some mechanism put in place
to ensure that these items are recovered from the delivery point, so
tend to be restricted to “closed loop” systems, where the sender has
complete control over the transport system used.
Waste cardboard and stretch wrap material can be baled (to reduce the
space it takes up), and passed to specialist recycling operators. In this
situation, documentation will be provided by the collector that can then be
used to offset some recycling obligations.

Pictures courtesy of Orwak
As well as being environmentally desirable, well thought-out and managed

waste management programmes can enable companies to save money
and improve efficiency.
Activity 6
What laws apply in your own country with regard to waste?
How does a company that you know of dispose of waste materials and what does it
recycle?

this section.
1. What is packaging used for?

2. What methods are available for reducing packaging waste?
3. How can packaging waste be recycled?
4. Why would it be sensible to recycle and reduce waste even without legal
enforcement?


1. What is packaging used for?
It enables products to be stored and stacked together.
It provides protection from damage.
It provides protection from pilferage .
It can be used to advertise the product.
It can be used to display product information.
2. What methods are available for reducing packaging waste?
Proper maintenance programmes to ensure equipment is working efficiently.
Turning off machinery, water, lights, heat etc when it is not required.
Using low energy light bulbs and targeted lighting at workstations.
Installing drip trays to prevent spillages.
Using mechanical methods for cleaning instead of solvents.
Eliminating unnecessary packaging.
3. How can packaging waste be recycled?
Segregating and reusing waste paper.
Selecting easily recyclable material.
Reusing and recycling waste solvents
Using plastic liners with drums carrying waste materials to permit their reuse.
Reducing packaging weight to a minimum.
Use multi trip packaging.
4. Why would it be sensible to recycle and reduce waste even without legal
enforcement?
To reduce costs.

Section 7: Safety and Training

Section Objectives

♦ Understand the legal framework relating to safety
♦ Explain why Health and Safety is important to an organisation
♦ Understand that training can improve safety and reduce costs
♦ Understand the different components of a comprehensive safety policy
Equipment Use and Maintenance

Proper training must be given to any employee who is using equipment
and all such equipment must be properly maintained and certified at
regular intervals.
Fork Trucks
Modern materials handling equipment (MHE) is manufactured to safety
standards laid down by European Directives covering design and function.
Ultimately, however, safety is down to the individual using the equipment.
Training is of critical importance.
According to the Health and Safety Executive in the UK (HSE), “the

handling of loads accounts for more than one third of all industrial
accidents. Of these, an estimated 90% are caused by operator error”. 5
Training enables an operator, to acquire the skills and knowledge that
foster an environment for safe and efficient working practices along with a
better understanding of his/her responsibilities to the company their
colleagues and the environment.
Your company should have a strong self interest in safety as the economic
impacts of accidents can be considerable, such as:
♦ Damage to equipment.
♦ Damage to stock.
♦ Damage to premises.
♦ Delays in productivity.
♦ Heavy fines.
♦ Adverse publicity.
5
“Looking Forward to a Safer Future” Fork Lift Truck Association Safety Conference 2003 SHD supplement

♦ Expensive litigation.
♦ Personal injury to staff
Health and Safety training reduces incidents involving injury and damage
and associated costs. The result is improvement in efficiency and
productivity. Suitable Health and Safety training is required under section
2 of the Health and Safety at Work Act and should be conducted on
recruitment, when individuals change jobs, when systems of work change
or when new equipment or technology is introduced.
The statutory requirements for operators and training personnel come

under the Provision and Use of Work Equipment Regulations 1998
(PUWER), which are made under the Health and Safety at Work Act 1974.
PUWER contains 39 regulations, one of which (number 9) relates
specifically to training, and includes operator and associated personnel
training and supervision.
Training staff in the use of fork lift trucks should be related to specific
vehicle types. A member of your staff who is fully trained in the use of a
counterbalance truck would not be able to drive a man-up turret truck
without the necessary training. Training should also relate to the
environment in which the trucks will be used. Special attention should be
paid to fork trucks working near the loading docks, as this is a particularly
dangerous area. Operators working in a VNA environment should be
trained in that environment.
Once staff has passed a competency test, they can be certificated and
should then be authorised to drive that particular piece of MHE in that
environment. This authorisation should be displayed on the safety notice
board.
A regime should be set up where users check trucks before they use them
– completing a vehicle check sheet. The vehicles themselves should be
properly maintained, and records kept of each service or remedial work
carried out.
A “report of thorough examination” needs to be completed every 12

months – the equivalent of an MOT certificate. This reduces to 6 months if
the fork truck is used with a working platform or cage, if the truck has
attachments other than a sideshift or is used for more than 40 hours per
week. Again, records should be kept.
Racking
The racking used within the warehouse also needs to be examined
regularly – at least once a year – to ensure that the structure is sound.
Racking can support huge weights, but if it is damaged, for instance by a
fork truck, and the structure is weakened then a collapse could be
catastrophic. Reports from inspections should be kept. Any accidents
should be reported and investigated internally straight away.

Racking is designed to cope with specific loads – heavy duty racking being
required for heavy loads. It is important that fork truck operators know
what the load-carrying capabilities of the racking are, and load
accordingly. Maximum load indicators should be prominently displayed.
Pallet scales are useful to establish weights of pallets that are to be stored.
Other Regulations
There are many other regulations covering health and safety provisions by
employers. The main items are summarised here.
First Aiders
Dependant on size, your company should ensure that a number of staff
are qualified as First Aiders, i.e. to give immediate simple healthcare and
who should then be re-assessed every three years to keep abreast of
developments in first aid care. The names and work locations of these
individuals should be displayed on notice boards.
Accidents should be recorded in an accident book, and a first aid cabinet

should be kept on site.
COSHH Regulations
COSHH (Control of Substances Hazardous to Health Regulations UK, 1999
stipulate that a register should be kept of all hazardous materials used or
kept on site. This could include substances such as bleach, cleaning
materials, even Tippex. Safety data sheets for the products should be
sourced from the manufacturers and a note made of the harmful
properties of the substances, and what action should be taken in the event
of a spillage or inhalation. It may be necessary to provide eye wash
stations at strategic locations around the premises.
Manual Handling
The Manual Handling Operations Regulations UK, 1992 – require
employers to avoid manual handling activities that could injure employees.
Where this is not possible, an assessment of these activities should be
carried out with a view to reducing the risk of injury.
Portable Appliance Testing

Legislation has been passed in the U K requiring the electrical installation in
premises to be tested every 5 years to establish whether it is safe. In
addition, portable appliances also need to be tested periodically. The
frequency of the testing will depend on the appliance, the environment
and how much it is used.

Personal Protective Equipment

If staff is working in an area where there are risks, then they should be
issued with clothing that can help to reduce the risk. In a warehouse, for
example, there is a risk of product falling on to someone’s feet. The risk of
someone’s foot being injured can be reduced through the provision of
steel-toed footware. Hard hats can also be provided.
Risk Assessment and Prevention

Employers are required to make a “suitable and sufficient assessment of
risks”, including those associated with fire, to the health and safety of their
employees whilst at work. The risk assessment should identify both
hazards – the potential to cause harm – and the risk – the likelihood of
that harm occurring.
Assessment must identify any significant risk that is reasonably

foreseeable. It should enable the assessor to decide what action needs to
be taken and what the priorities should be. It should also be appropriate
for the type of activity, remain valid for a reasonable time and reflect what
employers should know about the risks associated with their activities.
Assessments should be regularly reviewed. Where there are more than 5
employees, the assessment must be recorded and should include those
hazards that pose a significant risk, the control measures in place and
those exposed to risk.
Principles of Risk Prevention

♦ Avoid the risks.
♦ Evaluate those risks that cannot be avoided.
♦ Combat the risks at source.
♦ Adapt the work to the individual – consider workplace design and the
selection of equipment and work systems.
♦ Adapt to technical progress.
♦ Substitute the dangerous for less dangerous.
♦ Develop cohesive risk prevention policy for the whole business.
♦ Provide instructions for employees.
Health and Safety Policy

This is a document that brings together all the strands of health and safety
in an organization and should be displayed on a notice board for all
employees to read.
This statement should list the person with overall responsibility for health
and Safety – normally the managing director. It will then list those
responsible as deputies, the appointed health and safety representative

(who will have undergone specialist training) and those responsible in

specific areas.
The policy should also document:

♦ Employee’s responsibilities.
♦ Consultation mechanism between management and staff.
♦ Who conducts safety training?
♦ Who is responsible for risk assessments?
♦ What risk assessments should be carried out (e.g. manual handling, fire
safety, general risks).
♦ First Aiders – this should include who and where.
♦ Who provides health and safety advice and consultancy?
♦ Who is responsible for training?
♦ The processes for dealing with visitors to the site and contractors.
♦ The hazards in the business and the location of the risk assessment and
COSHH register.
Besides training fork truck operators to ensure safe working, other

employees also need to be trained – not only to ensure safety, but also to
maximize efficiency and productivity. If staff is properly trained, then there
will be fewer errors, less accidents and less time wasted.
When staff is new to the business, then induction training should be

conducted. This would comprise an introduction to the business itself,
followed by an explanation of safety factors. The notice board should be
included as this is the main method for displaying information to
employees. This will show the employees details about fire drills, health
and safety policy (including all the factors listed above), and what both the
employer’s and the employees’ responsibilities are.
Training should be given relating to the tasks the employee will be

undertaking. Ideally, this will involve spending time working alongside an
appropriately trained member of staff – on-the-job training. This, however,
should be accompanied by a detailed explanation of the written procedures
that will need to be adhered to. Attention should be paid to manual
handling instruction, particularly relating to the area in which the
employee will be working.
Other employees must have training needs identified, and training plans
drawn up to tackle skills shortfalls. This can be for employees remaining in
a particular activity who are not performing properly, or for any staff
moved to different activities.

Activity 7
What are the principles of risk assessment?
What specific risks are linked with your companies productivity?
How many First Aiders are trained in your company?

this section.
1. What are the economic impacts of a poor safety record?

2. What should be included in a health and safety policy statement?
3. How can racking be made safer?
4. What is COSHH ?

1. What are the economic impacts of a poor safety record?
Damage to equipment.
Damage to stock.
Damage to premises.
Delays in productivity.
Heavy fines.
Adverse publicity.
Expensive litigation.
2. What should be included in a health and safety policy statement?
Employee’s responsibilities.
Consultation mechanism between management and staff.
Who conducts safety training.
Who is responsible for risk assessments.
What risk assessments should be carried out.
First aiders.
Who provides health and safety advice and consultancy.
Who is responsible for training.
The processes for dealing with visitors to the site and contractors.
The hazards in the business and the location of the risk assessment and COSHH
register.
How can racking be made safer?
Regular examination

Observing safe loading limits

What is COSHH?
Control of Substances Hazardous to Health

Section 8: Case Study

A company manufactures and sells 100 different electrical products that
are stored in a warehouse next to the production plant. Customer orders
are picked and dispatched from this building throughout the UK.
This company has identified an opportunity in the market and can
significantly increase the company’s turnover, but they do not have the
manufacturing capacity to enable them to take advantage of this
opportunity. A consultant pointed out to them that they could source a
further 200 different electrical products from a third-party manufacturer in
the Far East, and this they have decided to do.
The current warehouse setup is as follows:
♦ The warehouse currently operates a block stacking system for pallet

storage, and each 1.25 metre high pallet can be stacked 4 high to a
height 6 metres.
♦ The warehouse roof is 10 metres high.
♦ A separate section is laid out with single pallets from where product can
be picked for customer orders.
♦ Staff picks single orders at a time using hand pallet trucks.
♦ A counterbalance fork truck is used to move product around the
warehouse
Current warehouse plan

Bearing in mind the increased lead times from third-party suppliers,

particularly the distance product needs to be transported from the Far East
to the UK, and the fact that a huge increase in stock will need to be stored
anyway, explain (using diagrams if necessary) how the company can,
without altering the building dimensions:
♦ Achieve greater storage density.

♦ Improve order turnround and efficiency by improving picking practices
and equipment.
♦ Ensure a safe new operation.
♦ Minimise the packaging waste that would increase with greater volumes
of more robustly packaged product being brought in.
Useful books
Key Text Book: Hand Book of Logistics and Distribution Management,
Alan Rushton, John Oxley, and Phil Croucher, 2006, Kogan Page
Others
Handbook of Logistics and Distribution Management, Gattorna, Gower

Walters D, 2003, Global Logistics and Distribution Planning – Strategies for
Management, Kogan Page
Logistics and Supply Chain Management, Christopher, Pitman Publishing

1998
Inventory Record Accuracy: Unleashing the Power of Cycle Counting, R
Brooks, L Wilson, John Wiley and Sons
Best Practice in Inventory Management – John Wiley and Sons – T Wild
Warehouse Management Handbook - Tompkins Press - James A.

Tompkins, Jerry D. Smith
Basics of Inventory Management: From Warehouse to Distribution Center

(Fifty Minute Series) - Crisp Pubns - J. David Viale, David J. Viale,
Christopher Carrigan
Logistics and Transport Focus Journal
Inventory Accuracy: People, Processes and Technology, D Piasecki, Ops Publishing

2003
http://opsandfulfillment.com/
www.dep.state.pa.us/dep/deputate/airwaste/wm/recycle/Tech_Rpts/Willist
own/Mfg.doc
www.turret-rai.co.uk/

www.ciltuk.org.uk
www.linde-mh.co.uk
www.imhx2004.co.uk/page.cfm/action=Exhib/ExhibID=00145
www.tclmagazine.com/
www.packagingmagazine.co.uk
www.hse.gov.uk/
www.elogistics101.com/Mag-Articles/Magazine-Articles.htm

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CILT Certificate

Open Learning Materials

Warehousing and Stores Operations

© The Chartered Institute of Logistics and Transport, February 2006

© The Chartered Institute of Logistics and Transport, February 2006

2 Storage and Equipment 21

5 Service and Administration 57

© The Chartered Institute of Logistics and Transport, for use in 2006 1

7 Safety and Training 74

• Equipment use and maintenance 74

2 © The Chartered Institute of Logistics and Transport, for use in 2006

Unit 4 comprises 8 sections

♦ Section 1 – Principles of warehouse design and layout

The purpose of this unit is to:

© The Chartered Institute of Logistics and Transport, for use in 2006 3

Section 1: Principles of Warehouse

Having completed this section you should be able to:

This section will take approximately 8 hours to complete.

Why Have Warehouses?

As a designer of a warehouse, you need to consider a number of factors:

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o the location of the markets being served,

If your organisation decides to serve a number of different markets, then a

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Theoretical Number of depots

Optimum number of warehouses

Optimum location of warehouse

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Fork trucks can now lift to heights of approximately 12 metres. If the

Docks and Offices

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Building Column Spacing

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Roof spans and column spacing

Warehouse Operating Functions

Ken Firth, in the Handbook of Logistics Management, has come to the

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warehouse onto collecting vehicles.

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Warehouse design involves consideration of a combination of materials

The concept is to form as large a unit as possible as early as possible, and

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staff. Standardisation has largely been brought about through the

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2. Using Warehouse Cube

It is important to ensure that attempts to minimize movement do not

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5. Safety and Security

6. Marshalling, Goods Receiving and Dispatch

The marshalling area is important within the warehouse, and it is

Once stock is reformed, it can be moved to the main storage area.

Marshalling space is also required for the dispatch of goods. If your

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If space is particularly restricted, then it is possible to increase the space

As a designer, you will also need to consider a number of factors when

♦ The type, size and number of vehicles making deliveries and

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1. Attempt to explain the location of the warehouse in relation to both the

3. Explain the building structure of the warehouse

5. Consider the marshalling area of the warehouse and evaluate whether it is an

Section 1: Knowledge Check