Warehousing Essay Example | Topics and Well Written Essays - 2500 words

Warehousing - Essay Example The need for operations managers to reduce manufacturing costs, optimize productivity and improve product quality in order to stay in the market has become imperative. Many organizations now recognize the importance of automation, optimization of scheduling and a proper inventory management system, and are incorporating total quality management and total quality in their operations. Every organization invests a considerable amount of capital on materials. In many cases, the cost of materials exceeds 50 percent of the total cost of goods produced ((ICMR), 2003). Such a large investment requires considerable planning and control so as to minimize wastage. Even before we talk about planning and control it is inevitable that the material is stored in a safe place and such place of storing materials is termed as a warehouse. Hence, Warehousing can be defined as the process of storing goods or merchandise safely (Answers.com, 2004). Inventory refers to a stock of goods, commodities, or other economic resources that are held by firms at a particular time for their future production requirements and for meeting future demands. Inventories can be direct or indirect. Direct inventories include goods that play an important role in manufacturing of a product and become a part of the finished product. Direct inventories include raw materials, work-in-progress goods, etc. Indirect inventories include goods that are necessary to run the production process but do not become part of the end product. For example, lubricants, grease, oils, stationery etc, are indirect inventories. 2. Brief History of Warehousing As defined above, a warehouse is a commercial building used for storage of goods. Warehouses are used by people like manufacturers, importers, exporters, people in the logistics industry etc. They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks (Answers.com, 2004). With advent of globalization and information technology, now-a-days, warehouses are being fully automated. In such automated warehouses, there are hardly any workers found working inside. The pallets and product are moved with a system of automated conveyors and automated storage and retrieval machines coordinated by programmable logic controllers and computers running logistics automation software (Answers.com, 2004). With the introduction of new and recent technologies like Just-in-time (JIT) and ABC classification systems,