DAY ONE:

Functions of a Modern Warehouse

Facilitator: Japhet Mbura
Lecturer & Consultant in Procurement,
Logistics, Transportation (Road, Railway
and Seaports)

Workshop on Stores Management Held on

September 14-18 nov, 2022 at Corridor
Springs Hotel Arusha by Arusha
International Capacity Building Centre
 Does Storage add value into Supply
Chain?
No there is no value added by having a
stores or a warehouse. If environment could
allow us to get all our needs as we order
that becomes best. Disadvantages
Expiry and obsolescence costs
Costs of managing the warehouse
Costs of space and handling
The opportunity cost of keeping stock

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 Warehousing…..
Warehousing is crucial to the success of
any business that handles physical goods.
There are many components of successful
warehouse operations, and we will discuss
the benefits and functions of warehousing.

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 Benefits of a Warehouse
Warehousing is when physical goods or
inventory are stored in a storage facility
before they are sold and distributed.
 Safety and Security
Economic advantages into business
Enables proper handling of materials
Ensures uninterrupted flow into our businesses
A centre for cost control

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 Benefits of a Modern Warehouse..
Production support
One of the ways to reduce your lead times is
through consistent and timely production
support. Warehouse facilities have
warehousing space and transport logistics
expertise, enabling you to safely store your
inventory until you require it. When the time
comes when you need your inventory, your
merchandise can be delivered where you
need it.
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 Benefits of a Modern Warehouse..
Opportunity to expand
When you are not restricted by the need to
store all your inventory, materials or
components at your manufacturing facility,
you can focus on your core business which
is producing your products. When you
outsource your storage to a warehouse,
your business can use its existing space for
product development and process
involvement.
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 Benefits of a Modern Warehouse..
Minimise business risk
When your goods are stored in a
warehouse, they are insured at the risk of
the warehouse owner. Keeping your
inventory at an off-site warehouse will
minimise inventory loss from issues such
as damage, theft, fire, etc. These risks are
transferred to the warehouse.

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Functions of Warehousing
We should never underestimate the role that a
modern warehouse plays into our businesses.

For this purpose it is important to understand the

functions of a warehouse

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 Storage Function…
 Storage
A primary function of a warehouse is
offering storage space for inventory,
equipment or other items. This provides a
facility where businesses can store their
goods when they do not need them. It also
prevents stock wastage and ensures that
their stock is protected and safe.

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 Storage Function…
 Ina warehouse, you can store goods from
when they are produced or purchased
until their use or consumption. There are
two kinds of storage; planned and
extended storage. Planned storage is
carefully estimated storage intended to
meet steady customer demand.

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 Storage Function…
 Extended storage is caused by various
factors such as promotional campaigns,
demand seasonality, or speculative
purchases. Promotional campaigns
include sales promotions where extra
stock must be stored to satisfy the
expected higher demand for products.

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 Storage Function…
 Demand seasonality is when demand
rises during different seasons, and
additional storage is required for that
specific period. Lastly, speculative
purchases are sometimes when goods are
purchased in bulk due to higher price or
lower price expectations in the future,
which calls for more storage space.

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 Security Function
 Warehousing protects stock from theft,
loss, or damage due to unfavourable
weather conditions, such as wind, dust,
moisture and heat, etc. Warehouses can
cater for different products and make
arrangements to do so. For example, the
warehouse can hire security guards to
prevent theft, use insecticides to preserve
goods, and arrange cold storage facilities
for perishable goods.
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 Security Function…
 Since warehouse spaces consider all the
risks and address them, it will
significantly reduce losses due to wastage
and spoilage of goods during storage.

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 Handling Function
 The movement of goods consists of
inbound activity where goods are
unloaded and received by the warehouse.
Secondly, there is transfer to storage when
goods are transferred from the inbound
area to the area for storage.

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 Handling Function….
 Thirdly, there is order selection when items in
the warehouse are chosen corresponding to the
order that needs to be shipped and moved to the
shipping area. Lastly, outbound activity refers
to inspecting and loading goods for shipment.
Moving goods inside a warehouse must be
seamless as possible as this ensures
uninterrupted orders. Therefore, the
infrastructure of warehouses and the software
systems used must be upgraded regularly.
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 Financing Function
 Financing is another function of a warehouse,
and it is a type of inventory financing which
involves loans being provided by a financial
institution to a company, processor, or
manufacturer. Commodities, inventory, or
goods are deposited in a warehouse and used as
loan collateral. When merchandise is
transferred to the warehouse, the depositor will
receive a receipt which serves as evidence for
the deposit of goods.
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 Financing Function..
 The warehouses issue a certificate in favour of
the owner of the goods, called “Warehouse-
keeper’s-warrant”. The warrant can be passed
on by simple endorsement and delivery. When
the warehouse-keeper is storing goods, the
owner can receive loans from financial
institutions, and the certificate can be pledged as
security. There are instances where warehouses
can give money advances to the depositors for a
short term where they can retain their goods as
security. 05/29/23 Imbura Japhet
 Economic Stabilization Function
Warehouses play an essential role in price
stabilisation as they assist in controlling violent
price fluctuations. They help by storing goods
whenever supply exceeds market demand and
then releasing the inventory when demand
gains pace. Warehouses guarantee a regular
supply of goods in the market as they help
match supply with demand which is essential
for price stabilisation.  

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 Economic Stabilization Function..
Whenever there is excess demand in the
market, having too much stock flowing may
decrease their prices, leading to losses for
business owners. Therefore, warehouses would
need to hold stock until the demand for the
goods rises again.

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 Information Centre Function
Warehouse track and record information about
materials and goods being sent into the
warehouse and when they are stored and
shipped out. The data maintained by the
warehouse’s information system must be
timely, precise and error-free.

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 Information Centre Function….
This enables warehouse managers and staff to
generate accurate insights to ensure stock
availability, stock replenishment, and stock
processing requirements. The data generated
can also be presented to higher management to
make better and more informed decisions.

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 Value Addition Function
A value-added service goes beyond
conventional warehousing. Such services help
optimise the supply chain management,
generate higher value, and deliver products
efficiently to customers. They include
bundling, customisation, re-branding, re-
packaging, processing, etc. A few of them are
discussed below–

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 Value Addition Function…
Processing:  It refers to the process that certain
goods go through to make them consumable.
For example, seasoning of timber, ripening of
fruits, processing of coffee beans, polishing of
paddy, etc. Sometimes warehouses perform
such activities on behalf of the owners.

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 Value Addition Function…
Grading and branding:  Warehouses also
undertake the functions of grading and
branding goods on behalf of the wholesaler,
importer or manufacturer of goods. They also
offer services for mixing, blending and co-
packing or repacking service.

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 Value Addition Function…
Kitting & Product
Customisation: Customisation services
provided by warehouses give the flexibility to
make bundles or customised product for any
customer or market requirements (for example-
bundling, SKU building, localising, product
boxing or kitting).

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 Value Addition Function…
Other services: Other value-added services
provided by a warehouse include labelling,
stamping, gift packing, barcode printing, order
fulfilment and invoice printing, quality
checking, insurance, and goods disposal.
Availability of such services with the
warehouse takes a considerable burden off the
entity using the warehouse and helps it focus
on its core activities. This results in lower costs
and higher standards.
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 Risk Bearing Function
The moment goods are delivered for storage, the
liability of these goods transfers to the
warehouse-keeper. Consequently, the risk of
loss or damage to goods is borne by the
warehouse keeper. Since it is now its obligation
to return the goods in good condition, the
warehouse becomes responsible for any
happenings. Thus, it takes all precautions to
prevent any such situation. The stored goods
may also be insured for compensation in case of
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 Rental Function
Some warehouses can also serve as a source of
rental income for their owners who rent them
out to people or entities that seek to use them
for storage or other purposes.

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 Utility Function
Warehouses are mainly located at convenient
places, for instance, near a road, airport, rail or
waterways to ease the movement of goods.
NOTE: it is logical to claim that a warehouse
plays a much more pivotal role in the success
of a business than most people manage to
realise. Proper monitoring of these functions is
imperative to guarantee that all warehousing
operations take place efficiently.

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 Successful Management of Stores
Operations
Effective and meaningful store management is
one the most important parts of ensuring your
business’s success. It covers a lot of ground,
however, including building your team, sourcing
and managing inventory, driving sales, creating
store policies and procedures, leading by
example, and marketing your business.

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 Building Stores Team
First, you need to recruit a large enough team
that will be effective and a good fit for your
business and the available roles.
Second, you need to create a work environment
that will help you keep that team and maximize
its potential.

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 Team recruitment
When recruiting your team, you should hire
people who can represent your business well.
Often, this means the ideal employee has
interests that align with what your store is
selling—they will be able to sell your products
better and genuinely connect with customers on
their interests.
At my fabric shop, my staff were all fabric
doctors. I can think of a few examples of where
you may have seen this:
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 Team recruitment…
Mbura’s Sporting Goods: Its staff is made up
of athletes and sports lovers.
Olotu’s Hardware: Every worker is an expert in
building and construction.
As you conduct job interviews and hunt for
the perfect employees to work at your store, I
suggest having a list of attributes that a perfect
candidate possesses.

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 Team recruitment…
This does not mean that you can only hire
people with all these qualities, but having a list
of ideals can be a great way to guide your
interview process and help you find candidates
that will represent your brand well. You might
want to include these categories in your list:
Product knowledge: You want someone who
knows about your products or industry so that
they act as an expert when selling and
answering questions.
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 Team recruitment…
Enthusiasm: You want someone who cares
and has a genuine interest in your brand and the
products you sell.
Experience: If you own a higher-end retail
location, you will want someone with sales
experience, preferably within your industry.

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 Team recruitment…
Customer interactions: You want a
salesperson who will be able to talk to
shoppers, assist them, and treat them with care.
People skills will play a huge role, so I suggest
using a floor interview to see how prospective
hires work with your customers.

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 Consider Scheduling in recruitment
Another key thing that you will want to account
for when hiring your team is availability.
Unlike the typical nine-to-five corporate role,
stores may need open later in the evening, on
weekends, and on many holidays. Before
bringing anyone on, you need to be clear about
your availability expectations and ensure that
you will have enough staff to cover your store
for weekends, holidays, and evenings.

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 Consider Scheduling in
recruitment…
My suggestion here would be to draw out a
weekly schedule so you can see how many
people you need in your store for any given
shift. For example, you might want only one
person on staff for the Friday morning shift, but
for the evening shift, you expect your store to
pick up, so you need three people on the
schedule. For holidays, sketch out your staffing
needs months in advance and nail down staff
members as soon as possible
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 Training after Recruitment
Once you have selected the people you want
for your team, you want to set them up for
success with strong on boarding and training.
To do your training well and reach a point of
trust with your staff, you must approach on
boarding in an organized manner. I suggest
making a training plan with checklists of
everything you need to teach for each week of
on boarding.

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 Training after Recruitment…
For example, at my store, I covered all
computer operations on week one. This was the
most technical part of the associate role, so I
wanted to give lots of time for learning. From
there, I would train on store organization and
processes on week two and use week three as a
chance to practice everything. At the end of
week three, we would do a check-in to review
anything and assess whether the new
employees are ready to work solo shifts.
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 Training after Recruitment…
Keeping an organized checklist not only
ensured I didn’t miss any training topics but
also offered a point of reference for associates
as they were going through onboarding. Areas
you should include in your checklist are:
Customer service: Return policies, complaint
policies, how to speak to customers, etc.
Store operations: Opening and closing duties,
new merchandise procedures, contact
references, how everything is organized, etc.
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 Training after Recruitment…
Sales: Making suggestions, upselling and
cross-selling, best-selling products, product
knowledge, etc.
Computer/POS operations: Ringing up
customers, conducting returns, printing tags,
running reports, pulling daily numbers, etc.
Loyalty program: Acquisition of new
members, what the program includes, signing
people up, etc.
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 Training after Recruitment…
Perks: Parking, overtime rate, employee
discounts, commission structure, events or odd
hours, etc.
Typically, onboarding training will take between
two to three weeks for retail jobs, and by that
time, you should have reviewed all the topics in
your training plan, and associates should feel
ready to work solo. Obviously, you should still be
available to your staff for questions at any point,
but they should have baseline confidence by the
end of their initial jobs.
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 Training after Recruitment…
The most successful retail operations
incorporate ongoing training well after
employees are onboarded. Regular staff
meetings to train on new products and
initiatives, on-the-floor coaching and feedback
around customer interactions and sales
opportunities, and role-playing customer
service scenarios are all part of growing a
stellar and cohesive retail team.

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 Training after Recruitment…
For example, at my store, we would have a
monthly, company-wide training session where
we would meet an hour before opening to
review an area of training with our managers.
This was great because it allowed shop
managers to review areas that were lapsing, go
over key customer service stuff before big
events, and it kept staff fresh and on their toes.

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 Inventory Management
From a Traditional thinking we need to answer
key important questions some of which are
traditionally done through deterministic and
probabilistic models
What should we keep in our warehouses?

How much should we keep?

When should we keep or produce?

NOTE: Wilson’s model (The EOQ)

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 Modern Inventory Management
In addition to building a team, managing a
store also includes responsibility for
inventory. Inventory management includes all
the processes that keep the right amount of
product on your shelves at all times. This
means spotting stockouts before they happen,
placing reorders in a timely manner,
and budgeting accordingly.

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 Modern Inventory Management..
I would suggest adopting an integrated Point
of Sale (POS) system to track your inventory
levels in real time and stay on top of low
inventory levels. Otherwise, you can track your
inventory levels manually using a spreadsheet.
Assignment: Use a workbook to design all
important variables that you need to consider in
inventory management

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 POS Systems
A point-of-sale (POS) system is a
combination of software and hardware that
centralizes sales, payment processing, and
customer relationship management (CRM). The
best POS systems also include robust tools for
inventory tracking, vendor management,
employee management, and customer loyalty.
Many POS software are free, though others
cost as much as $200 per month for a single
terminal.
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 POS Systems…
According to our evaluation of over 25 POS
software across 32 data points, the best point-of-
sale systems for small businesses are:
Square: Best overall, and best free POS for
small businesses
Shopify: Best for multichannel retailers
Lightspeed: Best for retailers with complex
inventory
Toast: Best for restaurants

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 POS Systems…
Vend by Lightspeed: Best for multilocation
brick-and-mortar retailers
TouchBistro: Best for small food and
beverage businesses
KORONA: Best c-store and liquor store POS
IT Retail: Best for grocers and markets
Lavu: Best restaurant POS for cash
discounting
Revel Systems: Best scalable POS for high-
volume restaurant and retail businesses
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 Stock Counting
There are two types to encounter shrinkage
Cycle Counts: This involves counting a small
portion of your inventory each day, week, or
month to make the counting process more
manageable. This method also allows you to
count products with a high sell-through rate or
value more frequently.
Annual Counts: This is when you do a yearly
count of all of your inventory, typically for tax
purposes.
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 Shrinkage
As mentioned above, inventory shrinkage refers
to any discrepancies in the number of products
you thought you had and the number you
actually have, based on your inventory counts.
Any time you detect shrinkage, you should
determine where it is coming from so you can
take steps to prevent it in the future.

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 Shrinkage Potential Sources
 Employees theft

Customer theft

Clerical errors

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 Create Data-driven Sales Goals
The best way to keep your store on track and
ensure that you are managing it well is to set
sales goals. I would recommend making your
goals granular, and providing daily, weekly,
monthly, and annual goals that you and your
staff can aim to achieve every day. Keep these
goals visible to all and make sure you
emphasize them daily. This can be a great way
to motivate your staff and keep everyone on the
same page.
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 Create Data-driven Sales Goals..
If you are just starting and have no sales data to
base your goals on, I recommend using your
annual retail budget as a guide. Your budget
should include all of your outgoing expenses,
giving you a picture of just how much you need
to sell to yield a profit.
Otherwise, you will want to use past sales
reports to set your sales goals.

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 Create Data-driven Sales Goals..
You can set your goals however you like, but
you generally want to see growth year over
year, so setting your sales goals 5%–10%
higher than your previous year’s sales number
will help you see if you are hitting that growth.
If your storefront operated during the COVID-
19 pandemic, you may want to use 2019 sales
numbers to set your goals and measure
performance instead of 2020 numbers. This
will give you a better idea of actual growth.
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 Create Data-driven Sales Goals..
Another important factor to consider when
setting daily goals is the day of the week. In a
recent study, Zenreach found the biggest
shopping days for retailers across the country
are Fridays and Saturdays, and the smallest are
Sundays and Tuesdays. As you are setting
goals and looking at past sales data, be sure to
keep this in mind and adjust your goals
depending on the day of the week.

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 Establish procedures for clean and
organized store
While maybe not the most glamorous part of
your job, one of the biggest aspects of how to
manage a retail store is keeping it tidy and
organized. This means properly maintaining
any merchandise and store design elements,
putting products away as they get used, and
implementing a cleaning routine so that
everything stays sanitary.

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 Lead the Team
Part of managing your store is setting the work
environment and ethics for your space. How
you interact with your customers, the care you
take for your store, and how you present
yourself each day will massively impact your
staff and their performance.
Additionally, leadership in retail store
management includes making your staff excited
to be a part of the team and ensuring they feel
heard and respected.
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 Lead the Team…
Agood leader inspires by setting a strong
example and creating a positive environment.
This will make things more pleasant for
everyone and motivate your associates to
perform better for your brand.

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 Rewarding your team
You can create a positive work environment
and motivate your staff by creating a rewards
or commission structure. From my
experience, using a blended approach that
rewards both team and individual performance
works best. For example, individuals could
earn a sales commission, while there is also a
team bonus for meeting a monthly sales goal.

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 Rewarding your team…
Less formal rewards like gift cards, small treats
for your highest performing associate of the
week, or a dinner or get-together after a big
sales day can also be effective.
Whatever you can do to motivate your
employees and demonstrate your appreciation
for their efforts will pay off and make working
for your store all the more fun.

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 Lead by Example
Show your employees what you want from
them through your actions. As part of managing
your store, you set the overall tone for
everything that happens. How you lead makes a
significant impact on how your staff performs
and understands their job expectations. You
should be the best salesperson, the most helpful
customer service agent, the most meticulous
cleaner and organizer, and the most motivated
person on the floor.
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THANK YOU

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