Warehousing, Material Handling & Packaging - January 9th, 2007

WAREHOUSE MANAGEMENT
Introduction to Warehousing
A warehouse is a location with adequate facilities where volume shipment are received
from a production centre, broken down, reassembled into combinations representing a
particular order or orders, and shipped to the customer’s location or locations.

The concept of distribution warehouse or a distribution centre is vastly different from the
earlier concept of a godown for storage. The godown is merely a dumping place.
Godowns are maintained merely for storage of surplus goods. The earlier concept, which
led to the establishment of warehouses, was based on the need for ensuring a
continuous, uninterrupted supply of goods in the market area for the following:

(1) Ensuring protection against delays and uncertainties in transportation arising from a
variety of factors.
(2) Eliminating lack of sophistication in production control and consequent uncertainties
in the availability of product at the desired time and place.
(3) Providing for adjustment between the time of production and the time of use
because production and use can be seldom synchronized.

From the foregoing, it is obvious that earlier a warehouse was considered a necessary
evil which was to be toletated, but which did little to provide a differential advantage.
The modern distribution centre or distribution warehouse is a pivot in the physical
distribution system. According to this system, movement is the primary objective of a
warehouse. As per this new concept, a warehouse is a location where inputs (incoming
factory shipment) are converted into outputs (outward shipments representing orders of
customers).this conversion takes place without consuming too much time. The goods
may be received over a period of time from different places, combined or broken down
into each individual customer’s orders, and dispatched to the next point in the
distribution channel without their coming to rest within the confines of the distribution
centre. Because of the usual and often inevitable lack of coordination between inbound
and outbound goods, storage facilities of a temporary nature must be provided for in the
scheme.

Characteristics of warehouse activity

The warehouse activity work is “non-value adding” work. It is pointed out for better
profits the stores should not exist. Also the material movement should be reduced to
zero. These are “non-value adding” activities.

This is because “value” is what the customer is prepared to pay for. A customer is willing
to pay for is the physical conversion/ processing of material into product. The
configuration of the product forms only one element of what a customer is willing to pay
for. Also customer needs other points such as following.
 The product should be available,
 At a required location
 At required time.

Warehouse provides these values. These are apart from value added due to conversion.
For that reason management must pay the maximum attention to the stocking and
handling related activities.

The reduction and elimination of unnecessary activity requires care and attention in the
planning of these activities so that the performance of the system improves. For that it is
observed that the locations of most stores, they tend to be placed at a remote corner,
out of sight and mind. What is really required is that the storage of material be as close
to the point of use as possible. This facilitates communications with production, and also
makes the movement of material simpler. Warehouse away from factory may be
acceptable coupled with good transport arrangements and good information
communication system backed with computer arrangements.

Functions of warehouse
The functions of warehouse are as follows.
 Receive the Material: - Receiving and accounting of products. This receiving is to be
done from manufacturing factories and subcontractors directly. Count for proper quantity
as per the documents.

 Store the Material properly: - Provide the right and adequate storage and preserve the
material properly. Ensure that the materials do not suffer from damage, pilferage or
deterioration. When receiving the material it is to be seen that often the products come
in big packs of more number of quantity.

 Mixing of material: - The products and subassemblies are received from different
sources are often requiring mixing and assembling together to satisfy need of customers.
This job is at increasing day by day. Some main warehouses of engineering goods are
coupled with a small assembly shop and finishing work like just attaching nameplate
after final check up.

 Remove the material when required: - Facilitating easy location and removing
materials.

 Deliver the material to right place: - Fulfilling the demand of customer and markets by
proper issue of items on the receipt of authorized documents. This includes consolidating
the requirements from customer. In a package of order there will be number of
products, subassemblies, which are to be collected from different suppliers.

 Keep the records perfectly in discipline: - To maintain proper records and update
receipt and issue of materials

 Packaging and waiting for order: - Often warehouse person has to make package for
delivery till the final order is received with payment conditions fulfilled by customer. The
material is then loaded carefully in the transport vehicle to present to the customer in
appropriate condition.

 Maintaining good housekeeping: - Keeping the warehouse clean and is good order so
that the handling, preservation, stocking, receipt and issue can be done satisfactorily.
 Keep proper control: - Keeping a vigil on the discrepancies, abnormal consumptions,
accumulation of stocks, pilfaration, theft etc. Exercising control measures.

 Manage the people in perfect discipline: - The people working have to be followed as
per the written policies and manual.

 Avoid keeping surplus material: - Minimization of surplus and obsolescence through

proper inventory control, and effective disposal of surplus and obsolete items.

 Verification of stocks at regular interval: - Verifying the bin card balances with the
physical quantities in the bins and initiating the purchasing cycle at appropriate time so
as to avoid the out of stock situations.

 Arranging transport: - For presenting the product consignment to the customer it is

essential to plan and arrange proper vehicle. This needs to be done for keeping economy
and quality. The placing the product upside down etc as per need is very much required
to maintain the product quality.

WAREHOUSE ORGANISATION

The organization of the warehouse is a shown in figure above. This is a major marketing
function. It is having the main section as receiving, transport, finished goods stores and
accounting. The movement department is often reporting to materials manager.
However it has link with stores management. This is administratively reporting to stores
management but functionally it is with marketing departments.

From the total control point of view the warehouse may get included with the rest of
materials activities. This facilitates the coordination among related materials activities
from the point of view of operations. It has also important job of inventory control.

Warehouse activity is related with the production department. That is because of the
following.
 In order to run the production operation smoothly the production management must
complete understanding of product mix to market their schedules.
In order to supply the required products to the market the production shops have to plan
the materials, manpower, machines etc.

PRIVATE AND PUBLIC WAREHOUSES

A warehouse may be privately owned and operated by a company making its own goods.
This is called private warehouse. A ware house may be owned and operated by another
organization, including a government agency, and only used by a company on certain
terms and conditions. This is called a public warehouse. A public warehouse may be
owned by a company in the private sector but used by the general public. Irrespective of
whether a warehouse is a private or a public, the following factors have to be taken into
account to work out the cost of storage:

 Interest on the cost of buying the site.

 Interest on the cost of furniture.

 Cost of repairs and maintenance.

 Depreciation on building and equipment.

 Insurance.

Private Warehousing
The construction and maintenance of private warehousing facilities can be extremely
costly. All expenses have to be carefully analyzed and evaluated. These are:

 Fixed expenses and building and land acquisition cost, which are high.

 Expenses incurred on ensuring that warehouses are properly equipped with material-
handling equipment like conveyors, fork lifts, hand trucks, racks and bin, and dock
levelers.

 The cost of salaries of staff required for peak activity periods, which can be very high.

 The cost of maintaining insurance records and of the premiums paid for fire, theft, and
also for workmen’s compensation.

 To this must be added the cost of regular maintenance and repairs and the cost of
such items as fuel, air-conditioning, power and light.

Advantages of Private Warehousing

The advantages of private warehousing are as follows:

 Private warehousing offers better control over the movement and storage of products
as required by the management from time to time.

 There is less likelihood or errors in the case of private warehousing since the
company’s product are handled by its own employees.

 In sum locations, for certain products or materials, public warehousing may not be
available and only solution possible may be the establishment of a private warehouse.

Public Warehousing
All the foregoing cost operates in public warehousing as well. But, in public warehousing,
the expenses are distributed over several other consignments of other clients. Therefore,
the net result is lower cost for each.

Advantages of public warehousing

Some of the advantages of public warehousing are:
 It is generally less expensive and more efficient.

 Public warehouses are usually strategically located and immediately available.

 Fixed costs of a warehouse are distributed among many users.

 The cost of public warehousing can be easily and exactly ascertained, and the user
pays only for the space and services he uses.

 Public warehousing is sufficiently to meet most space requirements, for several plans
are available for the requirements of different users.
TYPES OF WAREHOUSES

Bonded Warehouses
Private and public warehouses can be “bonded under the customs and excise act and
municipal corporation regulations, facilitating deferred payment of customs, excise or
octroi duty. The warehouseman releases only those goods on which the duty is paid on
production of roof of such payment and release order issued by the appropriate
authority.

Field Warehouse
Field warehouses are those which are managed by a public warehousing agency in the
premises of a factory or company which needs the facility for borrowing from a bank
against the certification of goods in storage or in process by an independent professional
warehouseman.

Cold Storages:
Cold storage facilities are provided for perishables against payment of a storage charge
for the space utilized by different parties. In a cold storage, it is essential that the
temperature is regulated and temperature variation is controlled to the degree
particularly for certain sensitive items.

Agricultural Warehouses:
These warehouses are meant storing agricultural produce grown in a certain area and
are located in assembling or regulated markets. These warehouses receive agricultural
commodities either directly from the farmers or through their commodities agents, or
from wholesalers.

Distribution Warehouses:
These warehouses are located close to the manufacturing concerns or consuming areas.
Their location depends on the nature of the product, the time taken for transit, operating
coast and the need to make the product available in the market in obedience to the
demand for it.

Buffer Storage Warehouses:

These warehouses are built at strategic locations with adequate transport and
communication facilities. They store food grains or fertilizers, etc.

Export and Import Warehousing:

These warehouses are located near the ports from where international trade is
undertaken. They provide transit storage facilities for goods awaiting onward movement.
Facilities for break-bulk, packaging, inspection, marketing, etc., are available at these
warehouses.

WAREHOUSE DESIGN
The stores activity has characteristic of non-value added activity. Just by saying that
there is tendency to view at it poorly. However the need cannot be neglected. And it is
essential to have better look at the design of the stores lay out and facilities. It should
be not be located at a remote place, as is done number of factories. We can eliminate or
reduce stores but not at the cost of stoppage of production. That way the stores can add
the value to the production activity.

There is no uniquely ideal manner to deign all stores. In the view of objectives, in the
correct proportion, depends on the situation and on the experience and knowledge of the
designer. Some of the objectives of the storage function are presented here. The intent
is not to prescribe a formula for designing a store, but to outline the consideration that
could play a role in the design.

A thing has to be kept in the mind that the stores design is not like any other office
design. Office design can be changed on and often. Changing the stores design is costly
matter. One cannot do it often. So proper thinking has to be done well before taking
actions.

Consideration for Design

• How well does the store meet the needs of its customer?
• Is appropriate technology being used?
• How well are the resources utilized in the store?
• How manageable is the store?
• How flexible is the store?

How well a store meets the needs of its customer depends on the customer and what his
needs are. Speed of response, stock rotation, and the flexibility to accommodate a
variety of parts etc. could be some of the needs that may be need to be addressed.
Customer need is an output expected from the store. The equipments can be used in the
stores are narrated in the further chapters. The staff and the workers need to be
provided with training. It is necessary to study what equipments will be useful for
satisfying the needs. Apart from the cost of the following points
must be studied along with volume of receipts and the dispatches before deciding.
 Should be use for workers.
 The physical matters like dimensions, weights, and speeds of the equipments.
 Should be easy to maintain.

WAREHOUSE LOCATION
The following considerations determine the location of a warehouse:
• Market service area and cost of distribution from the warehouse to the market area.

• Satisfaction of transport requirements and facilities available in the form of rail spur,
link roads and vehicles.

• Transportation rates prevailing in the area and distribution cost per unit.

• Competition by rival companies and whether they have warehouse in the same area.

• Availability of power, water, gas, sewerage disposal and their cost.

• Labour supply and labour cost in the area.

• Industrial relation climate and labour productivity.

• Pricing arrangements and the level of service desired to be rendered in terms of
availability of the product to the customer.

• Individual company requirements and constraints, including commitments, if any,

made to employees and others about a particular location which may influence a
decision.

• Real estate, excise and government taxes assessed in the area.

• Attitudes of local residents and government toward establishment of the warehousing.

• Potential for later expansion.

• Cost of land for the warehouse and other costs.

• Possibility of change in the use of the facility at a later date if the company so desires,
and lease or sale of the land and building.

An ideal warehouse location has following characteristics:

• It protects the stocks against ground moisture, rain, objectionable odours, insects,
rodents, birds, poultry, cattle, thieves, wind, fire, etc.

• It provides the necessary facilities for manual and mechanical operations, inspection,
disinfection, cleaning, reconditioning, packaging, etc. of the commodities.

• It is an economic unit, close to the market or railway siding with adequate covered
platforms and connected by good motorable roads.

• It offers the necessary amenities, such as water for drinking and fire-fighting, office
and residential accommodation, etc.

• As far as possible, it is located away from grain mandies, grocery or shopping centres,
grain fields, garbage dumping grounds, sewerage tanks and disposal plants, dairies,
poultry farms, tanneries, factories, because their close proximity is detrimental to
healthy storage facilities.

• Within a given general areas chosen for a warehouse, the choice of a particular site
depends on access, availability of transportation to and out of the site, are its proximity
to major customers.

• The site is not cut off from any part of the total service area by a river or other
geographic barriers.
CAPACITY OF WAREHOUSE
The term capacity of a warehouse refers to the overall cubic content of the warehouse
building, as well as the length, width, and height. The volume content of a warehouse
building is affected by a number of factors. Some of these are enumerated below:-

• Type of material to be handled;

• Handling system to be used;
• Stock layout arrangements;
• Dock requirements;
• Local building codes;
• Office area required.

Setting up a fixed warehouse at a given location becomes a constraint on warehouse

operations for number of years. The internal layout may be changed with a relative ease.
But it is difficult to change the overall size of the warehouse. Through the warehouse
size may be expanded at a later date or extra place may be leased, the resulting
available space may not be ideal. In general, poor planning of the warehouse leads to
either higher material handling costs in the warehouse with lower designed capacity or
unnecessary space cost if larger space than what is require is designed.

WAREHOUSE OPERATIONS
The essential processing of materials in a warehouse involves following operations:

Receiving Goods:
A warehouse accepts the merchandise delivered by a transporter or an attached factory
and then accepts the responsibility for this merchandise.

Identifying Goods:
The appropriate stock- keeping units are identified and a record made of the number of
each item received.

Sorting Goods:
The economic goods are sorted out for appropriate storage area in the warehouse.

Dispatching Goods to Storage:

The goods are kept aside where they can be found later, when needed.

Holding Goods:
The goods are kept in storage under proper protection until needed in the warehousing.

Retrieving Selective or Packing Goods:

Items ordered by customers are taken out from storage and grouped in a manner useful
for the next step.

Marshalling Goods:
The several items making up a single order are brought together and checked for
completeness and order records are prepared or modified.

Dispatching Goods:
The consolidated order is packaged suitably and directed to the right transport vehicle.

Preparing Records and Advices:

The number of orders received, the items received and on hand etc., are recorded for
replenishment action and stock control.
A warehouse may be used as a physical processing station. For example, goods may be
stored for aging, a form of processing. In some systems, minor assembly work,
conditioning, breaking bulk, adaptive

work for special requests, etc., may be carried out as a part of warehouse activity.

1) Receipt of Goods
The following operations are carried out before the acceptance of goods for storage and
issue of a warehouse receipt:
• The user of the facility or depositor tenders the goods for storage.

• The technical assistant attached to the warehouse examines the goods visually to
determine whether the stocks are worth storage.

• The goods are in good condition and can be stored; the depositor is required to submit
an application for storage of goods, with details of his name and address, nature of the
commodity, number of packages, their weight and value, etc.

• If the goods or commodities require cleaning to bring them up to an acceptable

standard, this must be done by the depositor.

• The goods are sampled as per a set procedure of sampling, depending on the nature of
the commodity.

• The samples so taken are analyzed as per the specifications provided by law.

• The stocks are graded on the basis of such characteristics as moisture content, foreign
matter, shriveled grains dirt, etc.

• If the packages or bags of the stock are not of a standard weight, they are
standardized at the warehouse.

• The bags or packages are counted, if they are standardized, before unloading from the
truck and after stocking, to be doubly sure that the correct number of packages has
been tendered.

• Warehouseman takes the specimen signature of the depositor or his agent for future
verification on the cards kept at the warehouse.
The warehouseman prepares a warehouse receipt with all the particulars, such as
location of the warehouse, name of the depositor and his address, description of
commodity, its quality or grade, weight, etc.

2) Storage in Warehouse
One of the fundamental features of warehousing is scientific storage and preservation of
goods. In order to ensure that the quality remains the same and is well preserved, the
following steps are taken:
• One of the samples obtained after a scientific sampling of the stocks is duly sealed with
a signed sample slip put inside the bag and is handed over to the depositor for future
verification in the event of any dispute as regards quality of the commodity.
• The warehouse is demarcated into different sections for storage of different
commodities or items according to their nature. These commodities or items are
accepted in the specific section meant for such goods.
• Different stacking methods are adopted, depending on the size of the packages and
the duration of storage.
• Quick moving goods are stored in a separate section, generally close to the doors, and
those goods which are likely to remain in storage for a long time are stored a little away.
• Gangways and operational spaces between stacks are left for necessary disinfestations
operations, re-stacking, turn-over, etc.
• The goods are periodically inspected to check that there has been no damage during
storage.
• If there is damage of goods or if it is found that the goods are not capable further
storage, the warehouseman can take action to have them delivered.
• If the depositor indicated in the notice does not take delivery of goods within the
stipulated period, the goods may be auctioned in the prescribed manner. A notice of
auction will be sent to the depositor indicating the date, time and place of the auction
well in advance.

3) Delivery of Goods
The delivery of goods is conditioned by the following factors:

• The goods stored in the warehouse may be delivered in one lot or in installments, as
required by the depositor.

• If the depositor is given an opportunities to examine his goods before taking delivery
and if he find on the time of taking delivery that the goods have been allowed to
deteriorate or to get damaged, he may lodge a protest within 72 hours of his
examination, and defer taking delivery. He has also to advise the licensing authority
under the act for necessary investigation and redressal.

• An application for delivery of goods has to be tendered by the depositor or his

authorized agent.

• The warehouse receipt is surrendered, duly discharged.

• The specimen signature is verified before delivery is made.

• The storage charges, insurance charges, etc., payable are worked out and collected
before delivery is made.

• If a part delivery is required, such delivery is endorsed in the column provided for it in
the warehouse receipt, and the receipt is returned to the depositor or the bank which
has produced the receipt for such delivery.

• If the goods are to be delivered in full, the warehouse receipt, duly discharged, is
surrendered to the warehouseman.

• Necessary entries in the stack-wise register, godown register, depositor’s ledger, stock
register etc. are made after delivery is made.

• The stocks are delivered against an acknowledgement of the depositor or his agent to
the effect that the goods have been received in goods condition and the sample kept in
the warehouse is returned to the depositor at the time of delivery.

Inventory at Multiple Locations - Square Root Formula

Currently popular approach is to consolidate inventories into fewer stocking locations in
order to reduce aggregate inventories and their associated costs. The root law (SLR)
help determine the extent to which inventories may be reduced through such a strategy.
Assuming that the total customer demands remain the same, the SLR estimates the
extent to which aggregate inventory needs will change as a firm increases or reduces the
number of stocking locations. In general greater the number of stocking locations
greater is the amount of inventory needed to maintain customer service levels.
Conversely, as inventories are consolidated into fewer stocking locations, aggregate
inventory level will decrease. The extent to which these changes will occur is understood
through application of the square root law.
The inventory level is normally proportional to the square root of number of warehouses.
The square root law states that the total safety stock inventories in a future number of
facilities can be approximated by multiplying the total amount of inventory at existing
facilities by the square root of the number of future facilities divided by the number of
existing facilities.
X2 = [X1] x N2
N1
Where,

N1 = no. of existing facilities, N2 = no. of future facilities

X1 = total inventory in existing facilities, X2 = total inventories in future facilities.

Assumptions:
Although the square root formula is simply stated, the model is base on several
reasonable assumptions:
1) Inventory transfers between stocking locations at the same levels are not common
practice;
2) Lead time do not vary and thus inventory centralization is not affected by supply
uncertainties;
3) Customer service levels as measured by inventory availability, is constant regardless
of the number of stocking locations
Demand at each location is normally distributed

WAREHOUSE SECURITY
The hazards for the goods stored in a warehouse are of the following nature:
 Theft and house breaking.
 Fire.
 Floods.
 Riots and civil commotion.
 Moisture, insects and rodents.

Though goods are generally insured against all these risks, except the last one, it is
nevertheless advisable to take adequate precautions to protect them. For this purpose,
the following measures are undertaken

1. Location & Structural Unity

A warehouse is constructed on a site away from colonies which breed anti-social
elements. The selected site is also away from low-lying areas, rivers etc., so that the
flooding might be avoided when the river is in spate. The structure is designed in such a
manner that the plinth is atleast one metre above the ground level. The platform of the
verandah and plinth of the warehouse are constructed in such a way that is made
rodent-proof. It generally has a compound wall of sufficient height, with only one gate
for entry and exit to ensure better and closer watch on incoming and outgoing persons
and vehicles.
A warehouse is also located away from dumping grounds, garbage pits, etc., to ensure
that insects which normally breed in such places, do not damage the goods in
warehouse.

2. Internal Security
The owners of goods, their agents and other dealing with the warehouse are screened so
that entry is permitted to only such persons as come on genuine business and do not
indulge in pilferage or other adverse activities of sabotage, etc. sufficient surveillance
measures are taken to ensure that the staff working in the warehouse do not indulge in
pilferage, thefts, etc. should be left for this has to be decided also in relation to the
uncertain needs of the future.

LICENSING OF WAREHOUSE IN INDIA

Each state has passed a warehouse act, which governs the working of the warehouse of
the central or state warehousing corporations or any private warehouseman. Under this
act, every warehouseman has to obtain license. The following are some of the conditions
laid down for the grant of a license for warehousing:
 The warehouse must be suitable for proper storage of the class of goods intended to
be stored.
 The applicant must be competent to conduct such a warehouse.
 The applicant must fulfill any other conditions that the state government may notify
from time to time.
 The applicant must pay the fees prescribed for the issue of a license and also furnish
security.
 Under the state warehouses acts, a warehouseman takes such care of the goods
stored with him as a man of normal prudence would take of his own goods.
 The warehouseman must keep his warehouse clean and in a hygienic condition, and
take all the necessary precautions against rats, pests, etc.
 Goods are required to be compulsorily insured against damage by fire, floods, theft or
any other accident.

MATERIAL HANDLING

The handling of material is a human activity which has been performed since time
immemorial. The construction of the great pyramids and other historical monuments all
over the world called for the handling of various types of materials in various form
methods. Material handling has now become an important and specialised function of all
industrial activity. It is as important as, costs and the production process.
A modern manufacturing plant works on assembly line principles. In an automobile
plant, the chassis moves along the assembly line where different workers attach
different parts in turn tighten a bolt or make certain adjustments. Finally, the finished
car emerges at the end of the process. A similar procedure is followed for other
assembly line production processes. Before it reaches the ultimate customer, the product
has to pass through a series of handling processes – from the procurement of raw
materials to the sale of the final article.
The manufacturing establishment first receives the raw material or spare parts which go
into the making of the product. They are conveyed to the place where they are stored.
Then they are taken to the preliminary fabrication or manufacture or the first production
process. Thereafter, they are again sent to the storage before they are moved into the
various stages of manufacturing operations.
Once the machine and processing operations are finished, the semi-manufactured or
finished product moves to final inspection and packaging. When all the manufacturing
operations are completed, it is again sent into storage to await transportation to
consumers.
Material handling is an essential production function. Organisations do not pay adequate
attention to this function. On an average, fifteen to twenty percent of the cost of a
product is incurred on material handling. Over and above this tangible cost of material
handling and of labour and machinery costs, they are the hidden costs of material
handling which arise from the damage of raw materials to the finished products, delay in
transportation, deterioration in the quality of the product, waste of productive labour
time and loss of production. This total material handling cost must be minimized by
designing a proper system.
Material handling is undertaken at every stage of logistics activity, and is an integral part
of the other elements of logistics function. Material is handled during the production
process, warehouses or storage, in transport, during packing and when goods are
returned by the customer for one reason or the other. This would insure cost reduction
in the operation of the overall material handling function and increase productivity.

MATERIAL HANDLING SYSTEM

Material is handled at the following stage

i. Raw material is transported from the vendor to the vendor to the warehouse of the
production unit. It is received by trucks, by rail wagons or even by ship. At the
warehouse the handling of material takes place. Thereafter, the material is stored.
ii. At the time the material is required for production process, it is again handled. It is
fed into the production process.
iii. This time the material handling is generally an integral part of the production process.
iv. After the material has been finally processed and turn into a finished product, the
finished product is handled and loaded for dispatch by a given mode of transport to a
field warehouse or a dealer.
v. Sometimes, the finished product is packed and directly loaded for transport.

vi. The material produced at the end of the process may be intermediate finished
product, so it also required handling.
vii. The semi-finished product is transported to other production unit so; this required
another material handling process.
viii. Assuming that the product has been stored in its final finished form, it has to be
finished before dispatch from the production center.
ix. The goods may be dispatched straight to the customer; in this case the handling of
the goods is done by the customer himself.

x. The goods may be dispatched to a field warehouse of the company, or to a public

warehouse, or to warehouse of stockist or distributor. In this case they are stored
suitably for dispatching to a customer, retailer or dealer, as the case may be.

Material handling involves the following point:

a) Receiving or dispatching of goods involving unloading, loading;
b) Flow of material within the production unit and warehouse;
c) Weighing of raw materials and finished products at warehouse;
d) Sampling of raw materials, intermediate products and finished products at nominated
stages;
e) Documentation.
Each of the above functions have been discussed in more detail in the following
paragraphs.
Receipt and dispatch & loading – unloading
The receipt of raw materials or the dispatch of finished products, at the production
center, plant warehouse or field warehouse may be considered a part of the
transportation function.
Receipt
i. Receipt of wagons, trucks, ships, etc., in a nominated area or location.
ii. Unloading of individual truck, wagon or ship.
iii. Storage of the goods (whether raw material or finished product) unloaded.
iv. Weighing of the goods received.
v. Documentation for receipts of goods.
vi. Documentation for the storage of goods.
vii. Communication to all concerned about the receipt of the goods.

Dispatch
i. Receipt of road trucks, rail wagons, ships, etc., in a nominated area or location.
ii. Weighing if goods whether directly or indirectly.
iii. Loading of individual truck, wagon or ship.
iv. Storage of adequate material to ensure uninterrupted loading.
v. Sampling of goods that are loaded.
vi. Documentation of dispatches, storage, weighing and samples.
vii. Communication of information about dispatches to all concern.

In general, the activities performed under material handling for the receipt and dispatch
of goods would require arrangement for:
i. The loading and unloading of trucks, wagons or ships;
ii. Waiting space for trucks, wagons and ships;
iii. Adequate storage space;
iv. Weighing facility;
v. Sampling facility;
vi. Documentation and communication system.
These arrangement are discussed briefly in the following paragraphs

1) Loading and unloading

The loading and unloading of goods has to be examined from the standpoint of speed of
loading and unloading , convenience and the saving on damage during the unloading/
loading operations. The loading and unloading facilities include suitable civil engineering
structures for the berthing of trucks, rail wagons or the ships and the loading unloading
and handling machinery.

Unloading structures
Fixed unloading structures include a sufficient number of properly designed docks for the
unloading of road trucks, adequate length of a platform of a proper design for unloading
rail wagons, and an adequate number of berths or wharfs of suitable design for ships.

RAIL PLATFORMS
Rail platforms are so designed that the wagons stand alongside a rail platform. The
height of the rail platform, measured from the top of the rail surface, is kept at 105 cms.
But the platform may be at the rali level, depending on the consignments required to be
unloaded or loaded. Heavy crane consignments are usually unloaded on open rail-level
platform, for crane movement is convenient on such platforms. Loose consignments like
coal, sand, earth, etc., are also loaded on rail-level platforms. These platforms have only
paved surfaces.
The width of the platform is determined on the basis of the storage space required, the
space for the movement of the men or machinery. But special care has to be exercised
to keep loaded or unloaded materials away from the track so that no derailment occurs.
The length of a rail platform is determined by the number of railway wagons required to
be unloaded or loaded at one time. The number of wagons placed at one time for
unloading or loading should be determined on the basis of the incoming or outgoing
materials for the rated capacity of the plant.
Infrastructure facilities should be liberally provided so as to take care of an increase in
the capacity for loading and unloading operation. Increases in loading and unloading
capacity may not be possible or become too expensive if sought to be undertaken only at
a later date, for then a major change may be called for in the layout of the rail-yard
platforms, which may not be possible or may require major structural changes, including
demolition, and this may turn out to be expensive.
Often, it may be convenient and some times desirable to split the length of the platform
to achieve greater flexibility in loading and unloading operations. This would take care of
the practical problem which arises when one wagon in the middle of a large number of
wagons lined along the platform is found to be defective or not loadable for some
reason. The platforms may be of equal lengths and positioned along two tracks.
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Platform length distributed over two or more platforms

This arrangement may be further modified to achieve greater flexibility in loading and
unloading by positioning a platform on either side of a track.

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One platform on either side of track

But the arrangements become inconvenient by reason of the existence of the island
platform and present difficulties in conveying the material from or to the island platform.
This arrangement, however, is convenient when loading and unloading operations are
arranged with the help of an overhead or underground conveyor.
SHIP WHARFS
Wharfs or berths are provided for the berthing of ships. Ships are berthed alongside a
wharf. The length of a berth or a wharf and the draft set a limit to the capacity of the
ship handled at the berth. The length of the ship to be handled at a wharf has to be less
than the length of the wharf, so that the vessel can be anchored fast to the bollards. The
draft at wharf has to be more than the draft of the ship, which is determined by the
weight of the vessel. Thus, the draft at the wharf determines the maximum load that can
be brought in by the ship. It is always better to bring in a ship with the maximum load
so that the freight charge per tonne may be the minimum.

Bollard

Schematic design of a ship alongside a wharf

Owing to the silting that takes place because of natural and man-made reasons in many
ports, the draft has a tendency to decrease. Desilting operations may have to be
undertaken to accommodate a particular capacity ship.
TYPES OF HANDLING MACHINERY
Normally, road trucks, rail wagons or ships can be unloaded manually. But with the large
volume of materials to be handled, the manual system becomes unwidely, and some
degree of mechanization has to be resorted. Also in order to speed up the
loading/unloading of materials and to make it convenient and cheaper, handling
machinery may be installed on truck docks, railway platforms and wharfs
Handling machinery is of two types. Fixed machinery, such as granty cranes, or fixed
cranes which have a certain reach required by vehicles to come close to them for loading
and unloading cargo. If a dock or platform is occupied for one reason or the other, the
machinery cannot be utilized for loading and unloading. In this case, the second type of
machinery can be used to move near the vehicle. In this category fall the various types
of mobile cranes or fork lifts or pay loaders, which lift the material from the truck, wagon
or ship. To speed up the operations, various types of conveyor systems may also be
installed.

Receipt and Despatch of vehicles

The incoming or outgoing vehicles cannot be straightaway placed for loading and
unloading, especially when the preceding vehicles are under operation. For example,
while some trucks are being unloaded at the docks, more trucks may come in. Similarly,
some railway wagons may be under unloading, in meantime, more wagons may come in.
Special arrangements such as Circulating area for road vehicles, Marshalling Yard for Rail
wagons, etc. have to be made for these vehicles, wagons and ships.

 Circulating Area for Road Vehicles

For road vehicles, a circulating area is provided where vehicles can be parked, awaiting
their turn for handling, otherwise they would have to wait outside the factory gates and
may block the entry or exit of vehicular traffic. Arrangements should also be made for
sufficient number of toilets so that the crew do not commit nuisance outside.

 Marshalling Yard for Rail Wagons

Railway wagons on their inward and outward journey, a marshalling yard is provided.
The wagons meant for the factory is sorted out and are taken to the factory. The
marshalling is also required to sort out empty from loaded wagons. The design of a
marshalling yard calls for a specialized skills. A marshalling yard consists of two or more
lines, suitably connected with loading lines. The design of a marshalling yard calls for
careful railway operating considerations, so that there may be an easy flow of wagons
from and to the loading points and a quick marshalling of different wagons.

EQUIPMENT
Storing
The different kinds of equipment which are used in a storeroom can be broadly classified
into two categories, viz. A judicious selection of different store equipment is a key of the
successful operation of a storeroom. Once a typical set is done it is difficult to change
the set up in future. The commonly used equipment in storeroom are as follows:

 Cabinets
 Stacking boxes
 Special storage racks
 Gravity feed racks
 Outdoor platform and racks
 Open and closed shelves
 Trays
 Drums

The selections of the equipment shall be governed by size, shape, other physical
characteristics, and the extent of preservation required. The selection of the material for
racks etc. wood or steel should be carefully done. The steel equipment has advantages
of strength, cleanliness and fire resistance.

Material Handling Equipments

In any given set up the material handling equipments the layout of the stores,
production shops is to be coordinated well. They are closely related with each other.

Manual material handling

Here the initial investment is low. The equipment used in such systems are racks,
drawers, bins, hand trucks, and gravity conveyors. The operations are done manually.
So the problems related to labour control exist. The systematic working, handling higher
loads, speed of operation is generally at low level. Utilisation of available space cannot
be done beyond certain height due to natural human constraints
The common type of material handling equipment used in stores is as follows:
 Trolleys
 Hoists
 Monorail
 Belt conveyor
 Roller conveyor
 Crane
The selection of the material handling equipment depends upon the size, shape and
weight of the item the location of the item in the stores, etc.

Manual equipments
Hand carts – Unpowered wagons, dollies, and trucks pushed about by workers.

Hydraulic scissor-lift tables

These are used for loading and unloading heavy materials like tools, die etc. these are
used as goods lift from transporting and raw material from ground level to finish first
floor level. They are driven by electric-operated power pack.
Stackers and portable cranes:
These are used for loading and unloading heavy materials from trucks. Also loading
heavy dies on the press machines. These are operated hydraulically.

Manual stacker
These are fabricated from steel channels for strength. They can be shifted any where in
the shop. Without bending they can lift heavy materials. By hydraulic pump they lift or
lower the material.

Hydraulic Pallet trucks

 Quick lift pumps design.
 Ultra-urethane wheels and sealed dual-precision ball bearings require less than 75 lbs.
pulling force at full capacity.
 Hydraulic pump includes overload and upper limit relief valve.
Fingertip lever control for selecting raising, neutral or lowering positions. Articulation
steering wheels.

 Include two steering wheels and two front load rollers.

 Steering wheels include bearing dust covers, providing longer life.
 Spring-loaded loop handle automatically returns to vertical position which not in use.
 Hydraulic pump design facilitates easy-access seal replacement.

Red powder coat finish is helps as antirust. Pedal lift elevating shop tricks, mechanical
material stackers, and motorized stackers. Monorail traveling trolleys, portable gantry
cranes are useful equipments in stores.

Pallet Trucks
These are used for low level of working, to lift the material, move the material. Height is
adjustable for any essential height. It is manually operated, safe and move on castor
wheels, which are easy to move.

Castor Wheels
These are made with the pressed thick steel, base. They are versatile to be used for all
moving material carrying equipments. These make the equipments easy to maneuvering
the equipment. They have thrust bearings for easy movements. Rubber or polyurethane
material is used for low load capacity requirements.

Fork-lift truck
These trucks are much used in the production shops and warehouses. They are good in
moving the material from a place to place. Over and above the tote boxes on the forks
can be elevated to desired level above the ground level.

Ladders
Different types of ladders are required in stores for placing of the material at high level
points. They are of different types. As per the requirements they are used.
 Wall supporting extendable ladder.
 Self supporting extendable ladder.
 Trolley based strong ladder, with solid steel base, the safety locks are provided.
Normally the ladders are made of thick aluminium sections. This makes them light in
weight, non-rusting, and rust proof.
Safety locks, rubber shoes, ropes, pulleys and castor locks are provided for ease of
movements.

Mechanised systems
Mechanized and automatic equipments need higher level investment. On long term they
may be economical. Machine power, electrical energy or mechanical engineering
techniques are used in place of labour. They use forklift trucks, tow tractors, order picker
trucks, cranes and conveyors

Conveyers
Conveyer system to move material or products has given start for the engineers.
Steel/plastic balls or rollers are mechanical mounted on the side channels and the
products move on them by driver motor or the power of gravity.
Belt-Motor-driven chain that drags. Materials along a metal slide base

Rollers
These are good for moving heavy materials from one place to other place. The path is
well guided by the number of rollers mounted on a structure. The rollers can be powered
by motor.

Cranes
Cranes are useful to pick up and shift the heavy material from one place to other place.
Hoists are mounted on overhead rails; they lift, swing, and transport large and heavy
materials. The cranes and hoists are having limited travel distance. These are specifically
used to shift heavy goods from and to ships.

Elevators
A type of crane that, while in a fixed position, lifts materials usually between floors of
buildings.

Turntables:
This device is used to mechanize the working on components in the different stages in
continuation to avoid handling. The stations on turn table hold, index, and rotate
materials or parts from operation to operation.

Automated systems
The concept of a totally automated storage and retrieval system has been inviting the
attention of professionals to match the storage system/ with the rapid developments in
the technology.
In automated systems computer programs are used to achieve controls on the
movements of equipments. Here the total movement is co-coordinated and perfectly
synchronized. These are systems for receiving orders for materials from anywhere in
operations or unloading areas, collecting the materials from locations within warehouse,
and delivering the materials from locations within a warehouse, and delivering the
materials to workstations in operations or loading areas. Computers and communication
systems are used for placing orders for materials, locating the materials in storage,
giving commands for delivery of the materials to locations for
loading/unloading/operations, and adjusting inventory records showing the amount and
location of materials.

Automated Guided Vehicle Systems (AGVS)

 Take the material order as per the list
 Automatically load the containers of materials from unloading area.
 Deliver to the place.
 Unloading the material.

The operator carries with him the list of items to be items to be retrieved. By making use
of predefined system he goes through the storeroom, stops the handling equipment at
respective bins and completes the list in a picking tour. He may go aisle-by-aisle or
according to items in list or by any other system. Operation Research techniques of
sequencing, routing, etc., can be applied to determine the optimal locations of items and
optimal route in a picking tour.

Benefits
 Increase storage capacity.
 Increase system throughout due to their continuous and tireless use. Reduce the
labour costs.
 Product quality is improved with the elimination of human error.
 Identify parts based on bar codes.
 Offer higher return on investment.
Better capability than standard inventory control systems.

PACKAGING

Introduction
The term packaging may be defined as the use of containers and parts, together with
the decoration and labeling of the product in order to contain, protect and identify the
merchandise and facilitate the use of the product. Sales promotion is an important
consideration in the selection of packaging aids in motivating a customer to buy the
product. The degree of motivation depends on the type of product, the type of customer
and the demand and supply situation. The printing matter and the company emblem or
trade mark project the manufacturer’s image to the customer.
All kinds of products, namely, solids, liquids, gases suspensions and colloids, have
usually to be packed before distribution. Depending on the market area, packaging may
be classified as for domestic sale or for export sale.
The various goods may be classified into the following broad categories:
1. Engineering goods;
2. Consumer goods;

1. Engineering goods
These may be divided further into the following:
(a) Heavy engineering goods, such as pumpas, compressors, engines, machinery,
spares, etc.
(b) Light engineering goods, such as instruments, small electronic motors, etc.
(c) Domestic appliances, such as sewing machines, fans, mixers, radios, tvs, etc.

2. Consumer goods
These may be classified as under:
a) Food products:
Canned products like vegetables and fruits.
Bakery products like biscuits, bread, cakes, etc. beverages, alcoholic, soft drinks, juices,
tea, coffee, cocoa, etc.
Toffee, chocolates, etc.
Other products like sugar salt, spices, etc.

b) Cosmetics, such as toothpaste, hair cream, shampoo, face powder, nail polish, etc.

PACKAGING MATERIALS
Jute
Since it has been recognized that renewable resources should continue to be the
mainstay, for a number of applications, the use of jute, also known as hesian or burlap,
is common and encouraged. Interestingly, India still continues to export a sizable portion
of its jute packaging production. New varieties of jute, better methods of weaving and
imparting improved functional qualities to it-like making it odour free- are some of the
areas which have received special attention. There is a general shift towards the use of
synthetics in performance to jute in bulk packaging.

Packaging Paper and Board

In the field of paper and board, the country is entirely dependent upon indigenous forest
resources which, however, are being rapidly depleted. Bamboo constitutes the main
supply source of paper raw materials. Research is under way on the use of quick yielding
timber varieties and of hard woods for paper manufacture.

Glass
The use of glass containers still continues to be encouraged for milk, liquid,
pharmaceutical preparations, fluid beverages, etc. India has abundant supplies of
minerals which are required for the manufacture of glass.

Tinplate
India produces hot dipped tinplate. Presently most of the mills adopt the electrolytic
process of coating tin. Attempts have been made to manufacture differential coatings as
well. Tinplate consumption is restricted by the slow growth in the processed food
industry, and large-scale uses continue to be for petroleum oils, edible oils and paints.
Tinplate containers for packaging have been adopted in India because of the necessity
for long periods of shelf –life and the inadequacies of the system of handling and
transportation which has made high- strength packaging compulsory. With the view to
reducing dependence on tinplate, dual packaging systems have been adopted for certain
food products, whereby the use of refill packages is encouraged.

Cellophane
A small quantity of cellophane is manufactured by a few units in India. There has been
hardly any expansion in its use in this country owing to the high cost of inputs for the
manufacture of cellophane and adverse atmospheric conditions and marketing systems.

Aluminium Foils and Tubes

The use of aluminium foils is confined mostly to pharmaceuticals, foods and tobacco. The
alternatives to aluminium foil are metalised plastics. Even though the introduction of
collapsible tubes was generally for tooth-paste and pharmaceutical ointments a great
variety of typical Indian products have got into collapsible tubes.

Plastics
The Indigenous production of plastics had its origin in industrial alcohol. The setting up
of petro-chemical complexes has had considerable impact on the promotion of plastic
raw materials. Earlier, the country was dependant on high and low density polyethylene.
Small quantities of imports of other thermo-plastics used to meet the country’s
packaging requirements. The versatility of plastics and their ability to upgrade
indigenous materials has naturally encouraged their greater use.

a) Laminated Jute Packaging:

Even during the early sixties, India began to export jute bags made from polyethylene
extrusion coated or polyethylene laminated jute materials. The large-scale expansion of
the fertilizer industry in the country resulted in the expansion of markets for this
material. Many export commodities use this as a packaging or as a water proof wrapping
material for the safe transit of goods.

b) Other laminates and coatings:

In the absence of oriented polypropylene, polyethylene-coated papers have had the
maximum share of the flexible pouch market. Industries have found polyethylene-coated
materials to be inexpensive and have favoured their use. Polyethylene- coated foil,
glassine paper, poster-paper-all find extensive markets in the country.

c) Shrinkable Films:
India uses shrinkable films and heat-set plastic films. In the area of shrink packaging,
however, the industry has limited it to the intermediate packages rather than extend it
to transportation packages.

PRODUCT AND PACKAGE DESIGN

Many products must be distributed in the way they are manufactured. These may be
costly to protect and may be subject to frequent damage. A product can undergo slight
changes in design so that objectionable obtrusions maybe reduced or removed or the
weak elements, which are likely to become damaged in shipment, may be strengthened.
It is not adequate realized that obtrusions or weak points can result in unnecessarily
higher transportation, packaging and damage costs.
The size, shape or closure of many consumer packages often offer sufficient flexibility to
sufficient flexibility to effectively create a modular packaging or to standardizes a
reduced number of different packages or containers of improved designs.
The manner in which a product is sold or packaged also has a direct bearing on
transportation costs. The higher the density the lower the transportation cost.

Protective packaging
The problem of protecting the product through the distribution process without damage
is a major concern of the marketing and logistic manager. The objective is to arrive at an
optimum protection level that will meet the desired customer service standard at a
minimum packaging expense. Only the most critical and highly expensive items should
be packaged for full protection.
Reduction in the protective levels must be evaluated against the added costs of
warehousing, compulsory use of racks and expensive redesign of mechanized and
automated handling system subjecting the packages to drop and impacts.

Cost reduction in packaging

The problems of the higher costs of physical distribution are caused when we examine
packaging narrowly and departmentally. The marketing management continues to look
at packaging strictly from a sales point of view. Packaging engineers, who are under
purchasing or manufacturing, examine it only as a protective device. Only a physical
distribution manager can look at packaging broadly and conceive of changes in design,
size, mode of transportation, etc. which will contribute to the effectiveness of the
distribution system. Most companies continue to deal with packaging as an engineering
problem without the total system outlook.

Transport Packaging
For the internal movement of goods, the Indian railways have introduced specially
designed containers. They differ from inter-modal containers in dimensions and in
capacity; but they meet the requirements of the reduction of gloss and damage in
transit, and minimized the packaging costs.
The development of inter-indol containers has been undertaken in India. The country’s
maritime transport has been geared to carry container cargo. Efforts have been made to
develop container ports in the country.

Testing of Packaging
Tests on packaging are performed mainly to determine its compatibility and transport-
worthiness. The various tests carried out are to determine tensile strength, breaking
load, burst factor, tearing strength, resistance to humidity (with salt spray) and
vibrations, drop strength, etc. The Indian Standards Institution has now developed
various standards for packaging.