DIPLOMA COURSE IN WAREHOUSE

MANAGEMENT

INTERNATIONAL SCHOOL
----------------OF----------------
SKILL DEVELOPMENT
KOCHI–
682033
KERALA,
INDIA

MODULE - 1
Dear Student,

This text book shall be an eye opener into the exciting world of Warehouse
Management. This module essentially covers the fundamental concepts
and shall be the first climbing step to the higher modules.

Academic Department
ISSD
WAREHOUSE PROCESS AND

FUNCTIONS
Sl.No. TOPIC
S

1 Supply Chain Management -Definition , Scope

2 Warehouse Management -Definition, Scope

3 Objectives of a warehouse Management

4 Classification of warehouse

5 Functions of a warehouse - Receipt, Putaway, Pick&pack, Delivery

6 Material management - scope

7 Function of Material Management

8 Material handling & Equipments

9 Safety measures in warehouse -Man, Machine, Material

10 Warehouse Selection and Layout

11 Warehouse Manuals - SOP, Registers, Vouchers

12 Store keeper -Duties and responsibilities

13 Storage Systems -Conventional, Semi automated, automated

14 Types of Storage Systems & Types of equipments

15 Binning System - Bin card

16 Insurance of material in warehouse

17 Claims Management

18 Transportation Management System

19 Third party Logistics ,Shipping documents
 WAREHOUSE
MANAGEMENT.
Warehouse plays vital role in supply chain management. It is in direct
touch with user departments. The most important purpose served by the
warehouse is to provide uninterrupted service to divisions. In other words
we can tell warehouse is a place where materials are kept and will be
used, as and when required.
Warehouse is an important component of material management since it is
a place that keeps the materials in a way by which the materials are well
accounted for, are maintained safe, and are available at the time of
requirement. Storage is an essential and most vital part of the economic
cycle and warehouse management is a specialized function, which can
contribute significantly to the overall efficiency and effectiveness of the
materials function. Literally warehouse refers to the place where materials
are kept under custody.

Supply Chain Management – Definition:

Supply Chain Management can be defined as the effective control of the
flows of material, information and finance in a network consisting of
suppliers manufactures, distributors, and customers.
Warehouse Management:
Warehouse management is to receive materials, protects while in
storage from damages, deterioration, pilferage and unauthorized
removals, and issues right
quantity at the right time to right place with least cost and prompt
service. Warehouse management includes the following 4 main
functions.
❖ Receipt of Material

❖ Putaway (Move to the Storage Place)

❖ Pick & Pack

❖ Shipping /Delivery

Objectives of Warehouse Management

The Objectives of warehouse management play a vital role in the
operations of company. It is in direct touch with the user departments in
its day-to-day activities. The most important purpose served by the
warehouse is to provide uninterrupted service to the various divisions of
the organization. Further, warehouses are often equated directly with
money, as money is locked up in the warehouse. Followings are the main
objectives of warehouse management.
❖ Uninterrupted supply of materials without delay to various
users of the organization.

❖ Prevent overstocking and under stocking of materials

❖ Safe handling and prevent damage

❖ Protect from pilferage, theft, fire, and other risks

❖ Minimize the cost of storage

❖ Ensure proper and continuous control of the materials

❖ Most effective use of storage space

❖ Optimize the efficiency of persons engaged in the warehouse.

 Classification of warehouse
Warehouses are mainly classified as Permanent and Temporary.
Warehouses can be of temporary nature which means that it has a
limited life. Warehouses can also be of permanent nature.
Warehouses are again classified basically in the following broad
categories. Functional warehouses – Functional warehouses are named
based on the function of the materials stored. Examples are fuels
warehouse, chemicals warehouse, tools warehouse, raw materials
warehouse, spare parts warehouse, equipment warehouse, refractories
warehouse, electric warehouse, explosives warehouse, and finished
goods warehouse etc.
Physical warehouses – Physically warehouses can be centralized
warehouses or decentralized warehouses. These warehouses are named
based on the size and location of the warehouse. Examples are central
warehouse, sub warehouse, department warehouse, site warehouse,
transit warehouses, receipt warehouse, intermediate warehouse, open
yard warehouse, and covered warehouse etc.
Warehouses are also classified by naming them after the departments to
which they serve. Examples are construction warehouses, operation
warehouses, rolling mill warehouses, blast furnace warehouses, and steel
melting shop warehouses etc.
Warehouses are sometimes classified based on the nature of
materials warehoused in them. Examples are general warehouse,
bonded warehouse, perishable warehouse, inflammable warehouse,
salvage warehouse, reject warehouse, and quarantine warehouse
etc.
Functions of a warehouse
In brief the functions are as follows:
1. Receipt, 2.Storage, 3.Retrieval, 4.Issue, 5.Control and
Verification, 6.Records Keeping, 7.interaction and coordination,
8.House Keeping

A professionally managed Warehouse has a process and a space within,

to receive the incoming materials (Receiving Bay), keep them for as long
as they are not required for use (Custody) and then to move them out of
warehouses for use (Issue).

The basic responsibilities of warehouses are to act as custodian and

controlling agent for parts, supplies, and materials, and to provide service
to users of those goods.
Typically, and at times essentially, warehouse has to follow certain
activities that are managed through use of various resources and are thus
called warehouse management. The task of warehouse keeping relates to
safe custody and preservation of the materials stocked to their receipts,
issue and accounting. The objective is to efficiently and economically
provide the right materials at the time when it is required and in the
condition in which it is required

Warehouse Receiving - Objective

When we talk about running an efficient warehouse operation, the
receiving process is imperative. It’s important to keep in mind that the
purpose is to receive the right product, in the right quantities, in the right
condition, weight, and dimensions all at the right time.
The proper receiving of goods will have a direct impact on all
subsequent warehouse processes. Let’s dig into it.
A warehouse goes through a standard receiving process when shipments
arrive to replenish stocked inventory. The warehouse coordinator or
inventory clerk has a set procedure to check all received shipments and
that paperwork is handled efficiently. If the warehouse personnel encounter
any receiving problems, the issues can be addressed quickly so that the
correct shipment is available for customers.
Shipment Identification
When a delivery truck arrives at the unloading dock, the inventory clerkspeaks with the driver
concerning the shipment. The receiving
personcheckstherecordstovalidatethattheparticularitemwasorderedandsetfor delivery. The
receiving person signs his name on the delivery
shippingnoticeasheacceptstheshipmentfromthedriver.

Product Count
Aftertheshippingnoticeissigned,thewarehousepersonnelunloadthecrates from the truck. He
counts the number of crates or boxes so thequantity matches the delivery driver's shipping
notice. Each crate isopened and an exact count of the received product is taken.
Anydiscrepancies in the count from the invoice slip is noted so that thepurchasing
departmentcanrectifythesituationwiththeproduct

Verification
The final step in the receiving process is to conduct a standard verification
process that includes checking of quantity received, description of goods,
product code, and condition of cargo – whether damaged or not.

In other cases, it might be necessary to conduct a more advanced verification

that entails checking the price, weight, dimensions, temperature, batch/lot
number and serial code.

IMPORTANT: A critical part of the verification process is to record and report

any discrepancies between what is expected and what is received.

One of the most time-consuming and labor-intensive tasks is counting and

verifying damaged cargo. The three common approaches to execute these
tasks are:
● Individual item count
● Count of pallets

And following Good Faith Receiving – more predominant among retailers

For those companies required to count one item at a time, the use of
warehouse technology such as barcode scanners or RFIDs integrated with
the Warehouse Management System (WMS) is essential to speed up
counting and reduce errors.

Another approach to speeding up the process is to conduct random checks

and keep record of all missing and/or damaged cargo and its supplier,
shipper and/or carrier. Once enough data has been collected, receiving
clerks will put focus on those suppliers, shippers and carriers with the most
recurrent problems. The warehouse manager should also use this data to
make these companies aware of the problem.

For companies needing to prove to their customers the state in which cargo
was received, the use of digital cameras installed on conveyors or freight
dimensioning systems and integrated with the WMS can dramatically
increase the speed of the image-capturing process. Image(s) can then be
shared through the customer portal and/or mobile applications.

On the other hand, for warehouses required to verify weight and dimensions,
weighing scales integrated with parcel/pallet dimensioning systems and the
warehouse management system are an excellent option for capturing all this
information quickly and without errors.

Receiving Documentation (GRN )

The receiving person inputs all product information into the warehouse data
system. The receiving person files all written documentation such as the
invoices and packing slips for auditing purposes. The employee uses the
documents to update the inventory received in the company’s inventory
system. After logging into the company’s computer system, the employee
enters each item received, the exact quantity received and the warehouse
location. After entering all items into the system, the employee prints this
inventory receipt report and adds this to the current set of documents. He
syncs the data with all other departments requiring the information, including
customer service, the sales department and accounts payable department.
He forwards the documents to the purchasing department.

Putaway process
Putaway process of moving incoming goods from the dock to their
permanent location within a warehouse. This permanent location could be
anywhere, including the pick area, the replenishment area, or the storage
area. Putaway is a critical step to increasing warehouse efficiency. The initial
placement of goods has a direct impact on all subsequent warehouse
processes, especially the picking process. If goods are not warehoused in
the optimal location, travel time increases, as does the time it takes to pick
and pack goods. Failing to warehouse cargo in the optimal location also adds
risk to the security/integrity of the cargo and/or the safety of the employees.

Putaway Process Objective

First, let’s review the main objective of the putaway process.

The prime objective of the putaway process is to move goods from the
dock to the most optimal warehouse storage location.
At the heart of the process is assuring that:
• Material is warehoused fast and efficiently
• Warehouse travel distance is reduced to a minimum
• Security of goods and the safety of warehouse employees is ensured
• Warehouse space utilization is maximized
• Material is easy to find and track within the warehouse
• Goods are warehoused in a location that is quick and easy to retrieve during
the picking process

Failing to properly implement an efficient process will have a direct impact on

the productivity of warehouse operations.

Order Picking process

Warehouse order picking is a simple concept, but in practice, it can be quite
complex. Simply put, warehouse order picking refers to the necessary labor
and parts involved in pulling an item from inventory to fulfill a customer’s
order. It’s a process that might sound like the most uncomplicated aspect of
your business, but when you crunch the numbers and realize that it amounts
to an average of 55% of operational costs within any given distribution center,
budget-conscious warehouses quickly find that ineffective systems could
stop them from further innovation.

Types of order picking

1. Zone Picking — Zone picking often is put into place when the warehouse
is compiling orders that contain multiple components and in large
warehouses to reduce walk times for individual pickers. The inventory is
organized into “zones” where an order picker or automated piece of
equipment is stationed with the unique SKUs found only in their zone. To
fulfill an order, bins or totes move through each zone, with associates
simultaneously collecting products for multiple orders. Once a bin gets to a
zone, the picker puts in the required number of SKUs to fulfill several orders
at once. The bin passes from zone to zone until all items are collected.

2. Discrete Picking — In discrete picking, instead of the worker being

assigned to a specific “zone” in the warehouse, they compile each piece of
necessary inventory in the order, one line at a time. This plan might work well
for a warehouse with a small team that isn’t inundated with complex
customer orders. While it may take more time in the pick area, the tradeoff is
that it minimizes the number of
touches to ship an order. An order can be picked with one touch, without
having additional sorts in a discrete picking methodology.

3. Batch/Multi-Order Picking — This works well for businesses that are

interested in picking up the pace in regards to order fulfillment. Batch picking
calls for managers to assess current orders for popularity and place them
into batches by their SKU. From there, pickers are in the best location of the
warehouse to get orders fulfilled as quickly as possible. Batch picking works
especially well for e- commerce businesses with somewhat predictable
ordering trends, like those specializing in food and apparel.

4. Cluster Picking — Efficiency is the name of the game for cluster picking,
which involves a single picker compiling multiple orders at a time, usually
dealing with a variety of SKUs. This method can give you a serious leg-up
when it comes to speed, but you will need to integrate special technologies
and resources to make it successful in your warehouse, such as a sharp,
well-trained picker, a mobile cart, automated equipment and voice solutions.

5. Wave Picking — Wave picking makes a whole lot of sense if your

warehouse is grappling with high fulfillment demand coupled with plenty of
diverse inventory. In wave picking, a single picker prepares each order, line-
by-line, but instead of simply being compiled in the number that it was placed,
all warehouse orders are first assessed to maximize shipping and picking
operations. This strategy allows “waves” of orders to be shipped and
compiled throughout the day, prioritized by time and importance.

Shipping Process
On its surface, the warehouse shipping process is simple. The customer
places an order, the warehouse management system (WMS) generates a
pick order, and a warehouseman follows the pick order, pulls the items
needed from inventory, and brings them all to packing. The packing
department boxes everything up, palletizes the load, and it all ships out on
the next available truck.

Issue Materials
The activities associated with issuing raw materials, subassemblies, and/or
semi- finished goods to a staging area or a production location (line, station,
cell, unit or vessel. This may include issuing materials explicitly sourced (S2)
for a specific Production Order and recording the GI to the Production Order
for some or all components/ingredients. Materials which are issued against
warehouses
requisition, which are to be entered in the warehouses ledger & a job or a
service are charged, are required to be priced by the cost department.
Materials are issued only on receipt of a properly authorized withdrawal form,
which is usually called a ‘Material Issue Requisition Form’(MIR) or
‘Warehouse Issue Voucher’ ( SIV.) On receipt of SIVs, warehouse
department issues the materials and records the quantities disbursed. A
copy of Voucher, duly entered by the warehouses regarding issue of
material, is then sent to the accounts department for pricing and entry in the
stock ledger. One copy of Voucher is sent to the department who has
initiated it for withdrawal of material. Material
Material Requisition in Warehouse:

It is indent in warehouse. An important rule, which should be strictly followed

is not to allow any materials to pass from the warehouses department into
the works except upon the authority of written requisition. These indents or
SIVs demands upon the warehouse-keeper signed by authorized person to
issue the material to bearer, to be charged to a particular job or department
specified therein.

These indents on warehouses are in triplicate

copies. It mentions :

The date,

The necessary particulars of the warehouses requisitioned, such as quantity

and description,

Order or job number to which the material is to

be charged Department number,

Signature of the indenter,

Space for the initial of the issuing store-keeper

The signature of the person receiving the material.

As it is in triplicate, the original copy is sent to the cost department for costing,

Duplicate retained by the warehouse-keeper

Triplicate in the bound book by the indenter as a permanent record

In some cases uses in duplicate. In such cases, the original copy is sent to
the cost department by the warehouse-keeper after making the necessary
entries. This is adopted only in small concerns.

A sample of indent on warehouse is given below:

Material requisitions and issuing

A materials requisition form is a source document that the production
department uses to request materials for manufacturing process.

Materials requisition form has:

a)job number, b)date of request, c)material description, d)quantity, and

e)proper management signatures.

Depending on the size of the company, request forms are filled out weekly,
daily, or even hourly.

The production manager usually fills out the materials requisition form and
delivers it to the materials or storage department where all of the raw
materials are warehoused. Once the materials manager signs off on the
request, the raw materials are moved from storage and placed on the
production floor.
Material Returned Note (MRN):-

Materials issued for departmental use sometimes are not actually used and
returned to the warehouse-keeper.

These are properly recorded and their value may be duly entered in the
warehouse records and these values may be credited to the accounts of the
department concerned by the cost department.

For this purpose, Material Returned Notes are written out in triplicate

MATERIAL MANAGEMENT & IMPORTANCE

Materials management is defined as “the function responsible for the
coordination of planning, sourcing, purchasing, moving, storing and
controlling materials in an optimum manner so as to provide a pre-
decided service to the customer at a minimum cost.
Materials management is a function, which aims for integrated approach
towards the management of materials in an industrial undertaking. Its main
objective is cost reduction and efficient handling of materials at all stages
and in all sections of the undertaking. Its function includes several
important aspects connected with material, such as, purchasing, storage,
inventory control, material handling, standardization etc.
Material Management is an important function of an organization covering
various aspects of input process, i.e., it deals with raw materials,
procurement of machines and other equipment’s necessary for the
production process and spare
parts for the maintenance of the plant. Thus in a production process
materials management can be considered as an preliminary to
transformation process
Functions of materials management under following heads:

(i) Planning and programming for materials purchase.

(ii) Warehouse and Stock control.
(iii) Receiving and issue of the material.
(iv) Transportation and material handling of the material.
(v) Value engineering and value analysis.
(vi) Disposal of scrap and surplus materials.

Materials planning and control:

Based on the sales forecast and production plans, the materials planning
and control is done. This involves estimating the individual requirements
of parts, preparing materials budget, forecasting the levels of inventories,
scheduling the orders and monitoring the performance in relation to
production and sales.

Purchasing:
This includes selection of sources of supply finalization in terms of
purchase, placement of purchase orders, follow-up, maintenance of
smooth relations with suppliers, approval of payments to suppliers,
evaluating and rating suppliers.

Warehouses management.
This involves physical control of materials, preservation of warehouses,
minimization of obsolescence and damage through timely disposal and
efficient handling, maintenance of warehouses records, proper location
and stocking. A warehouse is also responsible for the physical
verification of stocks and reconciling them with book figures. A
warehouse plays a vital role in the operations of a company.

Inventory control or management:

Inventory generally refers to the materials in stock. It is also called the idle
resource of an enterprise. Inventories represent those items, which are
either stocked for sale or they are in the process of manufacturing or they
are in the form of materials, which are yet to be utilized. The interval
between receiving the purchased parts and transforming them into final
products varies from industries to industries depending upon the cycle time
of manufacture. It is, therefore, necessary to hold inventories of various
kinds to act as a buffer between supply and demand for efficient operation
of the system. Thus, an effective control on inventory is a must for smooth
and efficient running of the production cycle with least interruptions.
Other related activities(3S)

1. Standardization: means producing maximum variety of products

from the minimum variety of materials, parts, tools and processes. It
is the process of establishing standards or units of measure by which
extent, quality, quantity, value, performance etc. may be compared
and measured.

2. Simplification: The concept of simplification is closely related to

standardization. Simplification is the process of reducing the variety of
products manufactured. Simplification is concerned with the reduction
of product range, assemblies, parts, materials and design.
3. Specifications: It refers to a precise statement that formulizes the
requirements of the customer. It may relate to a product, process or a
service.

MATERIAL HANDLING

Material Handling is the art and science of moving, conveying, elevating,

positioning, transporting, packaging, storing, protecting and controlling of
raw materials/parts/goods. It is to provide right amount of right material, in
right condition, at right place, in right position, in right sequence, at right
cost and with right method
Material handling is the movement, protection, storage and control of
materials and products throughout manufacturing, warehousing,
distribution, consumption and disposal.
A company’s material handling system and processes are put in place to
improve customer service, reduce inventory, shorten delivery time, and
lower overall handling costs in manufacturing, distribution and
transportation
The following characteristics are common in material handling in the
above definitions:
❖ It is the movement, protecting, storage and controlling of raw
materials/parts/semi-finished or finished goods in the
businesses
❖ It is to provide right amount of right material, in right condition,
at right place, in right position, in right sequence.
❖ It is done at the lowest possible cost.
❖ It is through the use of proper method(s) and equipment
❖ It is separate from processing operations and inspection
Material Handling Costs
The main costs involved in designing and operating a material handling
system are:
Equipment cost:
It comprises the purchasing of the equipment, auxiliary
components, and installations required for handling the materials.
Operating cost:
It consists of maintenance, electricity, fuel, and labor cost. It covers both
wages and injury compensation.
Unit purchase cost:
It is associated with purchasing the pallets (portable platform for storing
or moving goods that are stacked on it) and containers. It involves the
cost due to packaging of materials for movement and storing.
TYPES
1) Manual Handling
2) Semi automated Handling
3) Automated handling

Material Handling Equipments

Hydraulic hand pallet truck

Battery Operated Pallet Truck

Forklift
Order Picker

Low level Order Picker

Electric Pallet Stacker

CONVEYOR
RF SCANNER
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Warehouse Selection and Layout
Factors consider when selecting a warehouse:

1. Location: Think about the locations of your suppliers and your

customers. Where are most of your deliveries being made? Within a
specific region?
Nationwide? Internationally? Make sure your warehouse is in the
optimal location that minimizes costs for you, your clients, and your
customers.
2. Access: Any warehouse that you are considering as a major
distribution center should be easy for trucks to get to via main
highways. If you import or export goods overseas, then you’ll need a
warehouse that’s close to seaports.
3. Client Profile: Ask to see a list of your warehouse provider’s clients.
If their current clients are mostly smaller companies with straightforward
warehousing requirements, then perhaps they can’t handle more
sophisticated requirements of a larger company. On the other hand, if
the warehouse provider handles a lot of well-known brands and you’re
a mid-sized company,
you want to make sure that a) you don’t pay for more than you need,
and b) they’ll give you the same attention and customer service that
they would the “big guys.”
4. Storage Area: This is probably the most basic, but important
question for any warehouse provider. Do they have the capacity
you need? Beyond that, you want to ask if you’ll have access to
more space as your business grows.
5. Association Memberships: Are they active members of any well-
known associations like the IWLA (International Warehouse Logistics
Association)? If so, then that shows their commitment to learning,
gaining resources for improvement, and demonstrating their value
over time.
6. Experience: You want your warehouse provider to have ample
experience. Also consider the kind of freight they are experienced
with. Food distributors, for example, want to make sure that the
warehouse meets food grade requirements. Electronic or apparel
distributors will have a completely different set of requirements.
7. Employees: Does it seem like they are well-staffed
with knowledgeable
employees? Ask if you will have a “go-to” account representative
whose main responsibility will be to address your needs and concerns.
8. Value-Added Services: Does the warehouse only handle basic
storage and shipping services? Or are they able to offer packages
that include value-added services like inspection, dispatch, inventory,
reverse logistics, packaging, labeling, or reporting?
9. Risk: Your warehouse vendor will obviously take on a lot of the risk
associated with moving and storing your freight. However, you still want
to ask them about incident rates, safety procedures, and damage
plans. Also, ask to see copies of their insurance coverage. You want to
be absolutely clear up front
 about what they will or will not assume responsibility for so there
are no misunderstandings if damages do occur.
10. Technology: Make sure that whoever you choose keeps up with
the latest warehouse management technology. Do they rely mostly on
manpower, or have they invested in modern robotics and conveyor belt
systems to minimize human error? Ask if your computer systems and
software integrate with theirs. Can they provide real-time reporting of
inventory levels and other metrics?

SPACE LAYOUT

The warehouses space should be plan for:

Storage areas, Receipt area, Material picking &
Staging area Shipping Area
Equipment maintenance and
parking Charging of equipment
batteries,
An area for garbage
disposal A quarantine
area
Employee rest area and recreation
area Wash rooms
Administration office
Warehouse Mannuals.
A warehouse manual is a guideline that your company and their
employees can use to maintain standards It includes the following key
elements

1. Legal Requirements
This includes paperwork, licenses, business registration, limitation on
signage, and government approvals.

2. Standard Operations Procedures (SOP)

You need to specify what time the business would open and close,
and the opening and closing routines, and all the process in the
warehouse.

3. Accounting
This usually includes financial record-keeping techniques and procedures.

4. Stock related registers, various vouchers

This is related to stock and inventory, inward and outward
registers, and vouchers etc

SOP in Warehouse:
Standard Operating Procedure shortly known as SOP is a tool for
process improvement and standardization.
SOPs are the documents that help organizations to make the best
practices as a part of organizational culture in performing the various
processes, functions and activities.

The macro-level benefits of SOP are:

1. Well defined steps to perform a work
2. Standardization of activities irrespective of who is performing
3. Improved safety and security in operation
4. Best quality is delivered consistently in a repeated manner
5. Easy to train new employee
6. Sets a standard on expected performance
7. Minimizing wastages in processes
8. A platform for continuous improvement
9. A document to demonstrate management intentions in Court of Law

Many warehouses are in the process of transforming from a manual

system to an automated system using Warehouse Management Systems
(WMS). Before committing for a particular WMS, one need to understand
the processes within the warehouse. Just selecting and implementing any
WMS may cause lots of disappointments as the implemented WMS may
be a complete mismatch with your processes. Hence the first step in
automation is knowing your processes – meaning creating standard
operating procedures for your warehouse.

Typical SOPs for warehouses include the following:

01. Warehouse opening and closing procedures
02. Inward inspection and receiving
03. Outward inspection and shipment
04. Dock operation
05. Product handling and maintenance
06. Operating procedure
07. Product picking or selection procedure
08. Product put-away procedure
09. Procedure for bin allocations
10. Procedure for inventory management and reporting
11. Warehouse asset records and maintenance
12. Warehouse safety and security measures
13. Warehouse compliance management
14. Procedure and mechanism to monitor and control –
pilferage, theft and damage
15. Periodical training and assessment of warehouse professionals
16. Warehouse material management and disposal policies
17. Warehouse disaster management plan
18. Administration, HR, taxation and accounting policies
19. Procedures for value-added services etc.

WAREHOUSE LEDGER
A warehouses ledger is also known as a stock ledger. It is a type of ledger
which is maintained in costing department. It also works as internal control
systems
It is type of reconciliation sheet which is used to find any differences
between bin card and costing department records.
Normally bin card only keep quantity in records, it lacks the valuation
of inventory. In order to fulfill this deficiency, costing department takes
support from warehouses ledger
It is a manual or computer record of the raw materials and production
supplies warehoused in a production facility.
It is maintained by the person responsible for these assets (warehouse
manager) It is useful for maintaining a perpetual inventory system ( tracks
the current quantity of items on hand.)

A warehouses ledger can be used for the following purposes

1) Auditors( inventory records matches with on-hand quantities.)
2) Purchasing dept, ( when and what quantities to purchase)
3) Accounting dept, (cost of inventory on hand.)

Warehouses ledger follows mainly

two formats Unit quantities only.
The ledger shows the beginning unit quantity of an inventory or supplies
item, plus or minus any subsequent additions to or subtractions from stock.
When used for this purpose, the warehouses ledger may instead be
referred to as a bin card.

Coasted quantities.
Same as above, but cost of the items is also listed in the ledger.
(a) Inward and Outward Registers:
When the material is dispatched by the supplier through rail, he will
send its receipt issued by the railway authority, called ‘RR’. On the
production of
that receipt to railways material can be received by the consignee. A
separate register is maintained by the store-keeper in which daily entries
of R.R. received are made and known as “Inward Register”.
In the same way, when some material goes out of the warehouse to other
place, entries of R.R. are made by warehouse-keeper in Outward
Register and that R.R. is sent to the customer. On production of which,
he can take the material from Railways.

(b) Stock Register:

These are:
(i) Dead Stock or Non-Consumable Register.
(ii) Consumable Register.

(i) Dead Stock or Non-Consumable Register:

This is maintained by warehouse-keeper, in which entries of non-
consumable articles such as all machinery, equipment, furniture etc. are
made. The register shows complete details of articles together with
accessories. The different items are entered on different pages. All
transactions about a particular item are entered in one page.
(ii) Consumable Register:
In this, warehouse-keeper maintains record of consumable warehouses
received, such as coke, diesel oil, kerosene, petrol, lubricants, cotton
waste, paints etc. The different items are entered on different pages. All
the transactions about a particular item are entered in one page.
(c) Daily Receipt Register:
This may be in a register or loose leaf form. Whenever any material
comes in the warehouse, it is entered date wise in daily receipt register.
Material is then inspected and if found suitable, is entered in Stock
Register.
If the material is found defective, it will be rejected and either the material
or its reports will be sent to the supplier. The incidental charges that are
incurred will also be noted in daily receipt register.
(d) Issue Register:
This may be in register or loose leaf form. All warehouses issued are
entered date wise in it by warehouse-keeper. From the Receipt and issue
register, warehouse ledger is prepared by accounts section.
(e) Surplus Stock Register:
Sometimes such purchases are made, which do not come in use for long
time, say 3 years. Such materials are then declared surplus and are
recorded in a separate register called Surplus Stock Register.
Thus unnecessary material is removed from the Stock Register to
facilitate easy handling.

(f) Suspense Register:

The defective item or items received in excess should not be placed in
the bins but kept in “Suspense cell”, A separate register is maintained
by warehouse- keeper for all such items placed in suspense and is
known as Suspense Register.
(g) Condemned Article Register:
Unserviceable material after use or obsolete material which is authorized to
be condemned by authorized person is entered in this register and will be
shown as stock until disposed off. The balance of condemned articles will
be taken out from warehouse ledger and will be shown condemned.
(h) Loan Register:
Sometimes non-consumable material is issued from warehouse on loan for
temporary period by the production of slip of authority. Before issuing,
material is entered in this register and signature of the bearer is taken in
this register and slip of authority is kept safe.
When the material comes back, slip is returned and entry of material
received back is made in loan register.
(i) Empty Containers and Packages Register:
The record of empty containers and packages is kept in this register by
warehouse keeper. These should be disposed-off at convenient intervals
by auction or otherwise to the best advantage.
The above mentioned are the various records which must be kept
by warehouse- keeper for easy and smooth handling of
warehouses.

Main objectives of maintaining proper accounts are:

(i) It provides the exact quantity and values of warehouses.
(ii) Information about values of receipts and issues.
iii) Without physical check, can determine the order level of stock
(iv) To keep account of total expenditure.
(v) To provide basis for material costing.
(vi) To help in locating and preventing wastage, pilferages,
and misappropriation.
(vii) To help in keeping the level of inventory at a reasonable level.

It is desirable to know at all times as to how much working capital is

represented by warehouses in stock. The value of stock is also needed to
be shown in balance sheet as an asset. Value of the stock at the start and
at the end of the accounting year is used in preparing profit and loss
account.

VOUCHER
It is an initial recording document (purchase, sales, receipt or payment).and
primary document of the business which describes and authorizes the
payment of the company.
Voucher can be used as manual or computerized system

RECEIPT VOUCHERS:

Types of Receipt Vouchers

In small organizations, only single type of Receipt used
In large business firms, following types of voucher are prepared:-

1. Cash Receipt Voucher:- For all money which is received in cash.

2. Bank Receipt Voucher:- For all money received by way of

cheques, Demand Draft, Pay Orders or directly received by the bank
from any person on behalf of the company.
Preparation of Receipt Vouchers

To prepares the receipt voucher points to be

observe: Receipt number should be maintained
Date should be mentioned
Amount should be written both in figures and
words Signature of the receiver and authorizer
Receipt copy to be attached with the receipt voucher.
 Store keeper -Duties and responsibilities

Storekeeper is a person who is responsible for goods in a warehouse. He

is very important person for the warehouse. He is in-charge of warehouse
department and also responsible for warehouse control. Storekeeper
duties, responsibilities are defined below.

a) Receive and forward all types of goods and deliveries in and

out of the warehouse to the correct point of storage area.
b) Follow all standards for issuing and receiving stock within
the warehouse's area of operation.
c) Monitor and take inventory on regular basis to compile orders
based on par levels or needs.
d) Maintain clear and organized records to ensure all reports
and invoices are filed and warehoused properly.
e) Maintain receipts, records, and withdrawals of the stockroom
f) Receive, unload, and shelve supplies
g) Perform other stock-related duties, including returning,
packing, pricing, and labeling supplies
h) Inspect deliveries for damage or discrepancies; report those
to accounting for reimbursements and record keeping
i) Rotate stock and coordinate the disposal of surpluses
j) Ensure adequate record keeping and manage all documentation
to confirm proper stock levels and maintain inventory control
k) Coordinate the handling of freight, the movement of equipment,
and necessary minor repairs.
l) Refuse acceptance of damaged, unacceptable, or incorrect items.
m) Ensure all warehouse requisitions are signed by concerned
Department Heads (HOD’s) and approved by MD/GM depending upon
operations procedure
n) Responsible for the day to day check on the storage facilities
of upkeep and hygiene.
o) Ensure cleanliness of all areas, keeping storage areas clean & tidy
and in strict compliance with hygiene regulations.

FOLLOWING POINTS MUST BE OBSERVED BY STORE KEEPER:

1. Store keeper must be technically qualified relating to the items in which

the business firm is dealing. Otherwise it would be very difficult to identify
the goods.
2. Store keeper should not issue the material till he gets
proper authorized intimation from the sales department.
3. For each and every dispatch proper delivery challan should be prepared.
4. Store keeper should not accept the material from the
suppliers unless it is authorized by purchase department.
5. All supplies must be matched with the purchase order of the customers.
6. All purchases must be matched with the purchase order of the
business firms.
7. The store keeper must be very careful in respect of storage of the
stock. He must make sure that there should not be any wastage of the
warehouse items.
8. Store keeper must inform the purchase department well in time for
purchases of materials according to the quantity available in
warehouses.
9. Physical verification of stock must be done from time to time.
10. The safety of warehouse items is direct responsibility of store keeper.

Warehouse Hygiene
It is a Process which will enhance to productivity and also ensure the
statutory norms and the organizations objectives met.

a) First Aid
b) Safety and Security
c) Statutory and Compliance
 d) Warehouse Norms
e) Stacking Norms
f) House Keeping

Storage Systems - Conventional, Semi automated, Automated

A warehouse storage system makes the warehouse more organized. In

fact, the organization of a warehouse is the main purpose of these
systems and so, they are created to provide warehouse owners and
workers the convenience of managing or maintaining a warehouse. It can
be hard to maintain or manage a warehouse especially if the products are
in a total mess and since a storage system can help you have a more
organized warehouse, you will be saved from the stress of maintaining a
warehouse

The common types of warehouse storage system their uses

● Storage cabinets. Storage cabinets are used to

warehouse small or big items depending on the size of the
cabinets.
● Pallet storage systems. This works just like a cabinet when it
comes to storing items and the only difference is that instead of
cabinets, the items are warehoused in pallets and they are
stacked on racks to avoid mess.
● Mezzanine storage system. This type of storage system adds
more space to the warehouse to stack items high up.
● Automated system. This refers to any type of storage
equipment in the warehouse that are automated or can be
operated automatically.

Benefits of a Warehouse Storage System

A warehouse storage system is considered as one of the best storage

solutions because of the many benefits it can offer to warehouse owners.
These benefits are:

● A more organized warehouse. A warehouse storage system makes

the warehouse more organized. In fact, the organization of a
warehouse is the main purpose of these systems and so, they are
created to provide warehouse owners and workers the convenience
of managing or maintaining a warehouse. It can be hard to maintain
or manage a warehouse especially if the products are in a total
mess
and since a storage
 system can help you have a more organized warehouse, you will
be saved from the stress of maintaining a warehouse.
● A safer warehouse for products and workers. A warehouse storage
system makes a warehouse organized and an organized
warehouse is a safer warehouse as it means there is no mess that
can threaten the safety of the workers while working. Plus, with
these systems, the products or goods are also kept safe and
protected as they are placed inside their proper places.
● Time and effort savings. Maintaining a warehouse can be very time-
consuming especially if you are manually keeping track of all the
items and manually taking the items out of other containers and
back. But if you have a warehouse storage system, you can save
time and effort since it would be easier for you to keep track of the
items, warehouse or take these items out of their containers.
● Space-savings. Since a warehouse storage system organizes a
warehouse, it also saves space since this system allows the
stacking of items high up above instead of cramming them all in one
post making the warehouse crowded.

Conventional Storage
System 1.Bulk Storage
2.Rack System
3.Shelving and
Bins 4.Drawer
Storage

2. Rack system: It provide a method of stacking unit load vertically and no

need to provide support
a) Cantilever racks: supporting horizontal block
b)Portable racks: portable box frames and can be stacked on top of
each other

4. Drive through racks & flow through racks

5. Shelving and bins & Drawers

• Shelf is horizontal platform, supported by a wall
• Bins are container and boxes
 AUTOMATED STORAGE SYSTEMS
An automated storage system is a type warehouse automation technology
specifically designed to buffer, warehouse, and retrieve product and
inventory on demand.

Benefits
By automating the low-value and easily repeated task of inventory
storage and retrieval, automated storage system brings many powerful
benefits to the operations that utilize it, including:
▪ More efficient use of floor space
▪ Ability to reclaim unused vertical space
▪ Increased inventory storage density
▪ Improved ergonomics and safety, resulting in fewer accidents
▪ Increased throughput
▪ Reduced labor costs
▪ Fewer labor constraints due to labor shortages
▪ Often modular design for maximum flexibility
▪ Increased order picking accuracy
▪ Improved product security for premium inventory
Things to Consider when Choosing a Warehouse Storage System

The Features and Functions.

* How does it work to perform the warehouse storage process?
* What results can you expect from that warehouse storage
system when it comes to storing materials and products?
* Does it have cool features that can really make the system helpful
and useful for your warehouse management tasks?
You need to consider these factors first so that you can choose a
functional and truly great-performing warehouse storage system.

The Structure or the Build.

Durability & safety: Can you guarantee the safety of the workers with the
said warehouse storage system already? Is it durable enough to last long?
You need to consider this factor first so that you can zero in on the
warehouse storage system that won’t bug you with costly repairs and
maintenance because of its poor structure quality and build.

The Cost: How much the system costs and how much you are supposed to
pay for that system. Is it cost-effective?
The Developer: The reputation of the developer of that system. Are they
known to be the best supplier, the best quality and best features of their
warehouse storage systems? You need to consider these factors as well
so that you can zero in on the system that is created by a certified
developer.

The Feedback: How the warehouse storage system is being rated by

previous users and warehouse owners. In other words, is the system rated
positively or negatively by the users? What do they say about the system?
You need to consider this factor as well so that you can get the idea as to
what you can expect from that system and whether it is really the right
storage system for your warehouse or not.

Storage Systems & Types of equipment

One of the first steps that must be taken in order to craft a warehouse
that’s functional and organized is to select your storage system (or
systems). Naturally, this is not a choice that should be taken lightly;
warehouse storage systems are a major capital investment that,
depending on the design and the way they fit into your warehouse floor
plan and processes, can either help or hurt your throughput. Because
there are several different categories of warehouse storage systems on
the market today, it’s key to get acquainted with the options before being
sold on one that might not complement your layout or support your need
for flexibility.
To better expose you to the big world of warehouse storage systems,
we’ve compiled a list of the 6 most common types:
1.Static Shelving
2.Mobile Shelving
3.Pallet Racking
4.Multi-tier
Racking
5.Mezzanine
Flooring 6.Wire
Partitions

1. Static Shelving
As the name suggests, static shelves are storage mechanisms that are
designed to stay in one place. For the most part, they are meant to hold
inventory that is fairly lightweight (a few hundred pounds per shelf). It’s
commonly used for storing inventory that needs continuous replenishment.
Because they’re not compatible with forklifts, static shelving is generally
used with inventory that must be manually picked, placed, and/or
organized. For your larger inventory, invest in a wide-span shelving
system, which can hold more weight and can be used in higher-elevation
configurations.

2. Mobile Shelving
Similar to static shelving, mobile shelving is a completely adjustable
solution that is meant to hold your manually-picked items, but the
difference here is that many of these systems are designed to hold more
items in less space. With mobile shelving, shelves or cabinets are
mounted on carriage and rail systems, eliminating fixed aisles and
increasing productivity by making inventory more accessible, even when
space is tight.
Mobile shelving designs typically include level tracks that can either be
manual or mechanized. Some even come equipped with locking systems to
control access to inventory.
3. Pallet Racking
For the busiest and largest warehouses, pallet racking systems are usually
treated as the centerpiece of the operation. Typically, pallet racking
systems are made out of wood, metal, or plastic and hold inventory that is
received in large boxes.
Depending on the height, the boxes are placed on the pallet racking
system with the help of a forklift or an automated mechanism.
There are a variety of sub-categories of pallet racking systems, including
carton- flow racking, cantilever racking, coil racking, double-deep racking,
drive-in racking, drive-through racking, high-bay racking, mobile racking,
narrow aisle racking, pallet live racking, push back racking, shuttle racking,
and vertical racking. Most often, warehouses will choose systems based
on weight limits, flexibility, and whether or not the system demands a
change in infrastructure.

4. Multi-Tier Racking
A great choice for large stocks of items that have small unit sizes, multi-
tier racking is a system that is designed to capitalize on vertical space.
Because no warehouse is one-size-fits-all, many multi-tier racking
options are flexible, with the ability to add or remove tiers depending on
your current needs.
Mostly, multi-tier racking concerns relatively lightweight items that are
picked and organized manually. To get the most out of this warehouse
storage system, organize each tier strategically and pack items as densely
as possible, while at the same time paying attention to weight limits and
ceiling-to-rack height compliance guidelines.
5. Mezzanine Flooring
If you have the budget and your strategic warehouse layout allows for
it, mezzanine flooring is an effective and space-saving storage option.
Essentially, mezzanine flooring is a second (or third, or fourth) floor that is
constructed above the main warehouse floor.
Because of the intrusive nature of the build, this is likely one of the more
expensive options that a warehouse can choose, but it also has the most
potential for customized features, such as lighting, lift-systems, and
conveyors.

6. Wire Partitions
While mezzanine flooring is one of the more high-tech options, wire
partitions are on the other end of the spectrum. Wire partitions are,
effectively, strategically- placed wire cages that are meant to be installed
and torn down quickly and easily. Often, the inventory that is housed within
wire partitions are the items that may need special security. Some
warehouses are even known to use wire partitions to construct makeshift,
temporary offices for managers who work on the floor.
As you can see, there is a nice range of warehouse storage systems
available and, as we move into the future, warehouse storage systems
are only getting more lightweight, affordable, and technologically-
advanced.
As mentioned, don’t be
sold on a system that doesn’t fit your needs; instead, select one that
possesses enough flexibility to support your operation as it flourishes
and grows.

Types of equipment are commonly used in storing materials:

Pallets: A Pallet is a flat transport structure made of wood or plastic (few

cases metal) which can support a variety of goods in a stable fashion
while being lifted by anyone of MHE device. The goods are placed on the
top of the pallet and can be secured to it by straps or stretch-wrapped
plastic film
(ISO standard pallet measures 100cmX120cm X 12 cm) 15-21kg (48”X40”)
Types of wooden pallets

2) Shelving
3) Cabinets

4) Bins
5) Gravity feed racks
 BINNING SYSTEMS
Storage Bin is the smallest available unit of space in a warehouse. It
describes the position in the warehouse where the goods is or can be
warehoused.

Bin Card:
This is a card which is attached to each bin, rack, shelf or other container
for warehouses. A record of all materials entering or leaving the bin and
balance of material in hand is kept in this card. These cards are entered
by the warehouse- keeper and only the quantities are recorded.
These should tally with the quantities of material as shown in the
relevant account in the warehouses ledger. This will enable the
warehouse-keeper to ascertain the quantity of any material in stock
and remind him to requisition of fresh stock, when the minimum stock
has been reached.
Storage Bin Types

Stacking Bins: These storage bins stack on each other to save room on
shelving or in cabinets. They will hang on panels or rails and can be
divided to accommodate different parts in one container.
Shelf Bins: Used on shelving or in cabinets. Not designed to hang on
leveled panels or rails. If necessary, shelf bins can be divided.

Two-Bin Inventory Control

A system used to determine when items or materials used in production
should be replenished.
Mostly it is used for small or low-value items that can be easily
purchased and warehoused in bulk.
When items in the first bin have been depleted, an order is placed to refill
or replace them. The second bin is then supposed to have enough items
to last until
the order for the first bin arrives. In short, the first bin has a minimum of
working stock and the second bin keeps reserve stock or remaining
material.

SAFETY OF WAREHOUSE
To reduce the number of accidents associated with workplace equipment,
employers must train employees in the proper use and limitations of the
equipment they operate. In addition to powered industrial trucks, this
includes knowing how to safely and effectively use equipment such as
conveyors, cranes, and slings.
What precautions must workers take to avoid storage hazards?
Stored materials must not create a hazard for employees. Employers
should make workers aware of such factors as the materials’ height and
weight, how accessible the stored materials are to the user, and the
condition of the containers where the materials are being stored when
stacking and piling materials.
To prevent creating hazards when storing materials, employers
must do the following:
■ Keep storage areas free from accumulated materials that cause
tripping, fires, or explosions, or that may contribute to the harboring
of rats and other pests;
■ Place stored materials inside buildings that are under construction
and at least 6 feet from hoist ways, or inside floor openings and at least
10 feet away from exterior walls;
■ Separate noncompatible material; and
■ Equip employees who work on stored grain in silos, hoppers, or tanks,
with lifelines and safety belts. In addition, workers should consider
placing bound material on racks, and secure it by stacking, blocking, or
interlocking to prevent it from sliding, falling, or collapsing.
Stacking Norms is the standard measure delivered by the manufacturer
of the product based on the packing method and packing materials
characteristics that the product can store up to certain limited height and
specified direction

1-symbol indicates the direction of the product to be stored in

pallets 2-symbol indicates fragile product hence handle with
care
3- protects product from water
4- Indicates how many level the product can
be stacked SECURITY OF WAREHOUSE
Security in all warehouses should be properly planned and organized.
Doors should be strong and provided with good locks and windows
should be provided with iron grills or wire mesh.

a) The internal layout is arranged in such a way that there is a

spacious issue counter where people can obtain materials
without entering the storehouse.
b) Stockyards should be enclosed with fencing which is adequately high. For
extra Protection there could be a barbed wire fence along the top of a brick
wall. Gates similarly should be strong and locked.
c) Custody of keys: All keys of warehouse and stockyards should be
numbered and specific persons must be made responsible for them. Only
authorized persons shall be allowed for handling of keys concerned to
their departments.
d) Entry into warehouse Premises: No one except the authorized staff
should be allowed access into the stores. Staff coming to receive
materials issued from the Stores should not have access to the storage
area. Security should perform frisking with the help of hand held metal
detector

e) Housekeeping: Good housekeeping is one of the major

responsibilities of every warehouse Supervisor
f) Theft/Pilferage/Malpractice. Precaution against theft involves the
creation of an environment which is not congenial for these instincts to be
manifested.
g) Loss of warehouse: Any loss of stores shall immediately be reported to
immediate head. When the person responsible for such loss is unable to
explain a discrepancy, Loss statement will be prepared. After the
approval of the Loss Statement, write-off should be done and stock
records adjusted accordingly.
h) Precaution against Fire It is necessary to take every precaution against
fire and ensure that all fire regulations are strictly observed by all the staff.
Adequate fire fighting equipment should be provided. Warehouse
personnel should be trained in fire fighting
filRE EXTINGUISHER
i) Tally Cards / Bin Cards: These should be kept up dated and
hung/placed suitably on the racks/almirah /stacks.

GENERAL SAFETY SIGNS

 YOURSAFETY
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Insurance of material in warehouse.
During storage, goods are generally insured against fire, explosion,
riot, Strike flood, and earthquake under a policy and occasionally for
burglary and theft under burglary policy.

Some important considerations which influence insurance decisions

1) A Fidelity guarantee policy for key personnel in charge of
warehouse, Controlling and physically handling them for theft and
pilferages etc
2) where the stocks fluctuates in value during the course of a year, the
insurance can fix up declaration policy under a premium charged only
average value of the stocks
3) Premium rate is dependent upon the nature of storage in each non
communicating part of the building and therefore it is possible to
economize in premium amount if one can ensure that hazardous and
non hazardous materials are warehouse separately and the storage
warehouses do not communicate with the manufacturing section
4) whenever new machines purchased, it is advisable to cover the risk of
transit, storage, and erection under a single policy known as marine-cum-
erection policy

CLAIMS MANAGEMENT

In order to avoid delay on claim settlement and to get quick result for full
settlement, proper care should be taken at the time of taking insurance
and to see that the risks are covered adequately and unambiguously.
The following points to be considered
1)Whenever there is a chance of the insurance cover to terminate
before the materials to reach the ultimate destination,
written information to the insurer seeking extension of the cover should be
given 2)Whenever there is a change in the ordinary course of the transit
,written intimation to the insurer would save a lot of trouble
3)The insured or their agents must claim on the carriers and on the
port trust authorities for any missing package according to regulations.
In case of road/rail transport,
open delivery certificates must be demanded and detained in the case
of an apparent damage to the consignment to facilitate the lodging of a
claim 4)under no circumstances ,should claim receipts be given where
goods are in doubtful condition except under protest

MINIMIZING INSURANCE COST AND SELF -INSURANCE

We can minimize expenditure in two ways
1) By reducing the element of risk involved in material movement
and handling
2) By introducing self-insurance to take care of small and fairly
predictable losses and seeking insurer’s assistance only for the
protection against catastrophic losses

Transportation Management System

A transportation management system (TMS) is a logistics platform that

uses technology to help businesses plan, execute, and optimize the
physical movement of goods, both incoming and outgoing, and making
sure the shipment is compliant, proper documentation is available. This
kind of system is often part of a larger supply chain management (SCM)
system.

Benefits of Transport management system

Technological capabilities: With a transportation management system,

you as the shipper will have the technology you need to make routing
decisions based on quotes, transit time and carrier mix. This centralized
location for quoting will eliminate unnecessary stress and time spent
during the booking process.
Simplify processes: A TMS can help to simplify the carrier selection
process by allowing you to evaluate the merchandise being sent and
matching it with a carrier in the network. By managing this entire process
in one place, you will be able to revisit past shipments and quickly match
similar loads to the appropriate carriers.
Track freight: With a TMS, you can track freight that’s on the road and
even receive alerts to any transit exceptions or unforeseen delays from
one location. It’s impossible to control human error or Mother Nature,
however, a TMS will let you see when delays are occurring and why.
Business insights: Robust transportation management systems will offer
you in- depth insights and reporting capabilities. For example, let’s say you
oversee the shipping process for 20 locations that each send five
shipments out a week. That’s 100 shipping invoices to create and
shipments to evaluate each week. With a TMS, information will all be
stored in one location and custom reports can be created to analyze things
like the discrepancies between rates and final invoices.

Modes of Transportation
In the world of trade, the company with the ability to transport freight in the
most cost and time efficient manner reigns supreme in their industry.
Therefore; an essential part of transportation management lies in building
an efficient supply chain from the six main modes of
transportation: road, maritime, air, rail, intermodal, and pipeline.
Understanding
the strengths and weaknesses of each mode is paramount to building an
effective supply chain.
Logistics managers hire the carrier who fits four traits – whoever can
move the greatest volume of product with the greatest speed over the
greatest distance at the lowest cost. All companies hold these four traits
to different levels of importance but overall this principle remains true
across the board.
The modes by which companies approach these four aspects of shipping
has changed over time and is still changing to this day. Each of the six
main modes of transportation has its own advantages and disadvantages
for shippers to take into consideration. The first step toward choosing the
right mode is understanding the aspects that make each mode unique
from the others.

Road Transportation
The first, and most common mode of transportation in logistics, is road.
From walking to horses to wagons to bikes to cars to trucks, road
transportation has been around longer than mode and is utilized the most
of any mode in logistics. With the continued improvement of vehicles and
road infrastructure, transportation by road is the most versatile of the four
main modes with the least geographical constraints. This attribute of road
transport makes it the preferred mode for smaller loads over a shorter
distances and as such, road is the only mode that performs door-to-door
deliveries. Consequently, most shipments that initially were carried by
another mode of transportation are completed by road transportation.
Anything that can be shipped in small-to-medium quantities can be shipped
by road. Small packages (or Parcel) can be transported in a vehicle no
larger than personal car. Companies specializing in ecommerce ship
parcel when there are hundreds, if not thousands, of small packages being
shipped to different locations (Parcel is often made up of different modes of
transportation, but always picked up and delivered by truck).. On the
flipside, shipments larger than 150lbs. are considered freight and require a
truck. The two main forms of road transport are Less-than-Truck-load (LTL)
and Truck Load (TL).
LTL transports smaller shipments (primarily palletized shipments) to their
respective locations along a specified route. The route begins and ends at
a specified hub of origin and makes various stops according to the number
of different shipments it is carrying. This system of transportation is known
as the Hub and Spoke model. The advantage of LTL is that the shipper
only pays for the portion of the truck occupied by their freight while the rest
is paid for by the shippers using the rest of the truck. The disadvantage of
LTL is the multiple stops and transfers that the shipment undergoes en
route to its destination. A shipment will be transferred multiple times to
different trucks along the route much like a
passenger on a plane will be transferred to different planes en route to
their destination. This results in a longer shipping time and the
possibility of the shipment being damaged.
TL is much faster than LTL because it does not operate on a hub and
spoke model. As such, the truck will go from origin to destination with no
additional stops or transfers along the way. The drawback to TL is that a
shipper must ship a lot of freight in order to make the shipment
economical. Generally, if a shipment is longer than 16 linear feet or
20,000lbs or greater, it is cheaper to ship TL. In other cases, a shipper
needs a shipment moved much faster than LTL and cannot ship by air due
to cost or size regulations.
The main downside to road transport is the external influences that play
into its effectiveness, primarily weather, traffic, and road regulations, three
things that mostly don’t influence other modes. In addition to these
drawbacks, in the current shipping environment it has become increasingly
difficult to find truck drivers. This capacity shortage has led to an increase
in intermodal transportation.

Maritime Transportation
Shipping by water has been practiced for thousands of years and remains
pivotal to today’s global trade. 90% of all international trade is
accomplished through maritime transportation. Cargo ships travel on
almost every major body of water and have capacity to transport the
highest volume of freight of any mode of transportation at the lowest cost.
The routes available to container ships are calculated and strictly followed.
Many routes used today have been used for centuries. However, new
routes are still being sought out and tested for optimal supply chain
efficiency. In the past few months, Maersk sent a cargo ship over the
Arctic Circle for the first time in history to explore the potential for
increased efficiency in shipping routes.
The greatest disadvantage of maritime cargo ships is the speed at which
they operate. By far, maritime is the slowest mode of transportation. It is,
however, the most efficient for the amount of cargo it is capable of
carrying. In practice today, the speed of ships compared to air can have
great significance when it comes to regulations and tariffs. As of January
2017 there were 52,183 cargo ships in service; so at any given time there
can be thousands of ships at sea. If a sanction is put in place during a
ship’s 40 days at sea, the operators have to either turn around or comply
with a tariff they were not prepared to pay. This has caused a lot of upset
in the trade world recently.
Additionally, the carbon emissions produced by one cargo ship are
equivalent to the emissions produced by 50 million cars. There is a
continued effort to reduce ocean emissions by 50% by 2050. The closest
alternative to maritime shipping is
air shipping; however, due to current technological setbacks, air will not
be taking over maritime for international shipping anytime soon.

Air Transportation
The newest mode of transportation is air. Airplanes are becoming
increasingly important in domestic and international trade. With
continually improving technologies and practically unlimited route
possibilities, air transportation is the fastest growing and most time
efficient shipping mode. Consequently, many companies, such as
Amazon and UPS, have purchased their own fleets of airplanes to gain a
competitive edge in the growing market.
As air travel has become increasingly advanced and dependable, more
companies are trusting airplanes with high value freight and goods. The
increasing popularity of flight as a preferred way to travel also makes
shipping by air more convenient as shipments regularly piggyback on
passenger planes, further making air an economic way to transport goods.
There are a couple drawbacks to air transport. In its current state, air
transport is still, by far, the most expensive way to ship. Also, due to the
nature of air travel, weight and volume of freight has to stay minimal to
ensure the safety of the flight. The level of emissions produced by air
transport are also the highest of any mode.

Rail Transportation
First invented for use in the early 19th century, rail transport quickly
became vital for the expansion of the western world and has played a
pivotal role in the realm of logistics for over two centuries. In modern
practice, rail is used more exclusively for the largest and heaviest
payloads (bulk cargo) traveling across land. The vast majority of railway
infrastructure connects highly populated areas with large unpopulated
strips of land between them making rail ideal for long-distance and cross
country hauls. Canada, for example, is very sparsely populated between
coasts so anything shipped more than 500 miles often requires a rail
transport.
Rail transport is confined to a more limited infrastructure than road
transport. As a defining trait, locomotives (trains, monorails, etc.) are
confined to a traced path going between point A and B with very few points
of divergence. Railways are costly and time consuming to construct and
only a few new railways have been constructed since the early 1900’s.
Additionally, railways are limited to semi-level geographic areas making
construction increasingly laborious. Thus, railways are primarily only
accessible in large metropolitan areas. This attribute makes rail one of the
primary players in the intermodal transportation.
Within the confines of the railway system, the rail vehicle is not influenced
by traffic, points of diversion, and switch offs between modes. This makes
the rail
the most dependable mode for making long hauls across land with minimal
damage. Trains commonly carry bulk cargo items such as coal, corn, iron,
ore, and wheat, items that would be uneconomical to ship by truck.

Intermodal Transportation (Multimodal)

Often in logistics, one shipment is completed using multiple modes of
transportation. For example, consider a SMB in Germany shipping goods
to the Oregon. Their shipment will most likely begin on road, be
transferred to rail, then to maritime, which transfers to rail in the US, and
then arrives at its destination in Oregon by road once again. The purpose
is to take advantage of the individual strengths of the different modes, thus
reducing costs. This practice is known as intermodal transportation and is
often necessary in logistics.
Historically, intermodal presented many challenges for shippers and
carriers; primarily, transferring shipments between modes with maximum
efficiency and minimal damage. With the advent of containerization,
intermodal has become much more efficient and safe. By creating a
global system of standardized containers, warehouses and shipping
yards can safely and efficiently transfer containers between road, rail,
and maritime. The standard for intermodal containers is 8’ wide and 20’
or 40’ long. There is no set standard for height; however, most
containers average 8.5’ in height.
In recent years, intermodal has experienced a substantial uptick. With
rising freight rates and a shortage of available truck drivers on the
market, companies are turning to other modes, primarily rail, to complete
shipments. In a capacity crunch like this, companies scramble to see
how they can keep costs low while maintaining fulfillment promises.

Pipeline
Pipeline shipping is not a formal mode of transportation in the traditional
sense. However, it is important to acknowledge for its importance in the
current fossil fuel market.
Pipelines transport unrefined fossil fuels such as gas and oil from their
point of origin to the point where they can then be transferred to the
refineries or another mode of transportation. The cost of shipping primarily
lies in its construction, the diameter of the pipeline, and the viscosity of the
fluid being transported. They can be built above ground, underground, or
underwater making them ideal for offshore drilling.
The pumping of crude oil has risen in recent years the increasing need
of transporting crude oil is correlative with the increase in drilling and
extraction Traditionally, the transporting of oil was accomplished by rail
but oil and gas companies are quickly turning to pipeline shipping
because of increased safety
and efficiency. Regardless, the building of pipelines has been a topic of
controversy because of the environmental damage they will cause by
increasing the speed of the oil industry, creating additional fossil fuel
emissions, and slow the progress of sustainable energy. The
controversies surrounding the Trans- Alaska pipeline are a prime
example of this.

Each mode has its advantages and disadvantages for its role in the supply
chain. A primary responsibility of logistics managers worldwide is
calculating what the best mode is for a specific shipment. Each factor
comes into play: volume, speed, distance, and cost. What traits are
important to your company? Do you value speed over cost, cost over
volume, volume of distance, or the exact opposite? By knowing what mode
is best for your company, you can make the decisions necessary to grow
your business and create a winning supply chain.

Third Party Logistics

3PL, or third-party logistics, is essentially a variety of services and

processes that are provided to a business by an external company for a
variety of reasons such as wanting to reduce cost, improve efficiencies and
expand capabilities. 3PL services are usually flexible and scalable based
on the needs of the business, meaning that they can be utilized on an as-
needed basis, or as a long-term solution depending on the goals and
objectives of the business.
There are many reasons why companies choose to go the 3PL service
route. Often, as a company grows, the need for warehouse space
increases beyond that business’ ability to manage it. 3PL warehousing can
be a good option for companies facing storage capacity issues. Other
companies may be challenged with increasing transportation costs and
investment in equipment and vehicles. The large fleets of modern vehicles
and equipment that are available through 3PL providers are often a much
more cost-effective solution. Then there are US businesses looking to
expand into the Canadian market – a good 3PL will have the depth of
experience to help solve many logistics challenges involved with these
scenarios.
Other reasons why companies may choose to partner with a 3PL include
challenges with customer service, order fulfillment, returns, order tracking,
technical services, inventory management, and more. As you can expect,
the more of these struggles that a company faces as they grow, the more
value a 3PL partner can provide.

Benefits of 3PL
3PL logistics providers can deliver a great deal of value to companies
that are dealing with the challenges associated with rapid growth or
changing market conditions. Here are some of the main benefits that
can be realized by utilizing 3PL logistics.
Cost Savings
3PL providers have vast networks of resources across the country, and
the globe. This includes warehousing space, trucking and transportation
fleets, human resources, and technology that your company can take
advantage of without the necessary massive investment in overhead and
capital setting this all up on your own would require. This level of flexibility
adds up to significant cost savings which have a big impact on the bottom
line.
Flexibility
The level of service you obtain from a 3PL provider is entirely up to you,
and can be adjusted to accommodate different levels of business due to
seasonal or cyclical demands. For example, if your company sees a big
surge in orders every year for the holidays, 3PL companies can scale up
services and labor accordingly to meet high demand needs, and then go
back to normal levels once the surge subsides efficiency
In addition to the savings in capital costs, many companies see a
significant savings in time through 3PL services. This can take the form of
lower cost per unit shipped, faster transportation and reduced delivery
times, and in the ability for the whole organization to devote more time to
its core specialties, including product development, customer service,
sales & lead generation, or market growth.
Improved efficiency means greater return on your
investment. Customer Experience
In addition to business-side benefits, there are many customer-facing
benefits to 3PL services. Companies can expect to achieve faster and
more reliable delivery times, improved tracking and order status
communication, reduced chance of damage or incorrect product packing,
and more. All these benefits make a big difference in overall customer
satisfaction and retention, while improving the average lifetime value of
customers and your brand image.
International Reach
When an American company expands beyond its country’s borders into
Canada, a new set of challenges arises in the form of regulatory
compliance, customs clearance, and communications. 3PL providers are
able to assist companies with a smooth and efficient entry into new
markets through the use of their established & extensive Canadian
networks.
For anyone considering a move into Canadian markets, the guidance
available from experienced 3PL logistics providers is extremely
valuable.
Shipping documents are forms that accompany a shipment listing
the date shipped, the customer, the method of shipment, and the
quantities and specifications of goods shipped. Shipping documents
usually include bills of lading, packing lists, invoices, insurance
documents, and air waybills.

Bills of Landing : An inland bill of lading is often the first transportation

document required for international shipping created for your export. It can
be prepared by the inland carrier or you can create it yourself. It’s a
contract of carriage between the exporter and the shipper of the goods that
states where the goods are going; it also serves as your receipt that the
goods have been picked up.
In an international shipment, the inland bill of lading is not typically
consigned to the buyer. Instead, it is consigned to the carrier moving the
goods internationally or, if not directly to the carrier, to a forwarder,
warehouse or some other third party who will consign your goods to the
carrier when ready.

1) Natural calamity: act of God (eg: earthquake)

2) Act of public enemy (military attack against)
3) Act of shipper (e.g.: improper packaging)
4) Act of public authority (impounded by the police)
5) Act of resulting from the inherent nature of goods(eg: rust)

The bill of lading includes the terms and conditions of transportation. The
terms address issues like carriers liability for loss and damage and
reasonable dispatch requirements. Common carriers are typically held
liable for full value of lost or damaged products unless they can prove
one of the five exceptions
A shipper must file a claim for lost or damaged goods .This document
represents a claim against the carrier to recover financially from loss,
damage, or unreasonable delay. The shipper must file a claim with the
carrier within time limit usually nine months after delivery of the
product.
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