What is warehouse logistics and how to properly manage the warehouse

Fully operating system for the delivery of goods, raw materials of products is impossible without the proper organization of technical issues. A key role is played by warehouse logistics, which ensures the safety of the consignment of goods, regardless of their volume, specificity. It also provides the ability to carry out manipulations with the cargo: sort, receive new goods, to function as a distribution point and not only.

 

What is warehouse logistics, what are its specifics?

 

In short, it is an established, fully working mechanism. An integral part of the warehouse logistics are the very objects, facilities for sorting, labeling, issuing and receiving, distributing batches of goods. Of course, normal functioning is impossible without connection and with other elements of this well-functioning mechanism, for example, with the transport logistics, which provides direct delivery. It is from the safety, the ability to quickly process the cargo depends on the business opportunities of companies, the competitiveness, the ability to reach a new level, for example, from the regional to international.

 

What are the main functions of warehouse logistics?

 

There are different types of functions, which are the key functions. Thus, the main functions of warehouse logistics can be designated as follows:

 

  • Carrying out picking operations for a batch of goods. Often there are a variety of fixtures, equipment, types of raw materials, and goods stored in the warehouse. Customers are interested in different kitting, so, as a rule, separate compartments in warehouses are introduced just for kitting, checking the completeness of the batch, and sometimes labeling.
  • Direct storage of goods. This is the main function that warehouse logistics performs. Goods are released, produced at a certain moment, go through several stages, and the final point is considered the realization, shipment to the client. The less time passes from the moment of the release of goods to the direct delivery to the customer, the better for the functioning of the company.
  • Additional logistics services for customers. They lie in the preparation of goods for packing, selling, marking, unpacking, checking the performance, completeness of the set.

 

Also the main functions of the warehouse logistics – it and unitization, that is, the association of relatively small amounts of goods into a larger. They are made out and delivered to customers. The process of combining batches of goods will help to make logistics services more accessible.

There are different gradation of the main functions of the warehouse logistics, and the above example is not the only one, but everything is aimed at optimizing costs, reducing financial and time costs in the organization of business.

 

What should be the optimal organization of the warehouse

As you know, there are different functional purpose of the warehouse. The correct organization of the warehouse also depends on its type. The following table helps to understand this:

 

By design featuresWarehouses are divided into closed and open, consisting of one or more floors
Depending on the specifics of stored goodsThey are mainly divided into warehouses for raw materials, garbage and waste, equipment, finished products

 

The optimal organization of the warehouse – a rather complex mechanism. Sometimes there are situations when business owners are confident that everything is functioning according to the rules and there are no unnecessary costs. However, during an independent audit, which has become so popular in recent years, it turns out that with proper organization it is possible to significantly reduce costs. Sometimes the cost reduction reaches 30-50% of the total cost of providing storage facilities operations.

When organizing the work of the warehouse must take into account it, whether such storage is a factory or insurance, raw materials, transportation transit, production. There is also a separate category of objects, which is located near railway stations, airports. In this case they fulfill important strategic meaning, providing timely transportation of raw materials, cargoes, armament, equipment for the needs of the country.

 

What are the important principles of warehouse organization

 

Warehouse logistics and related topics are closely studied by specialists. In the countries of Western Europe, North America, the warehouse organization and other links in the logistics chain are closely studied since the 70s of the last century. It was then that logistics as a science began to develop, as significant improvements were made in the infrastructure.

It is impossible to properly organize a warehouse if there are no roads of proper quality, and if there are not enough railway trains, if there are not enough airports and railway stations. It was in the 1970s that the so-called “infrastructure revolution” began in North America and in Europe. In Central and Eastern Europe this direction began to develop a little later. However, domestic experts are eager to adopt foreign experience, adapting it to local realities.

 

Proper organization of warehouses implies the following principles:

 

  • Identifying the optimal number and area of warehouses. If a company has a large area, but its activities do not allow it to use it to the maximum, the downtime of free space will be more of a disadvantage than a plus. In addition, additional space implies costs for maintenance, security, and repairs. That is why one of the main principles of warehouse organization is the principle of optimal ratio between market needs and availability of a certain amount of storage space.
  • Taking into account infrastructure, its location. Even if the warehouse is modern, with an optimal area and good security, but it is located far from important transport hubs or is located in places with not the best infrastructure, its profitability decreases significantly. Location plays a huge role in the proper functioning of the entire logistics system.
  • Specifics of warehouse ownership. There have long been debates about what is preferable: the purchase of premises, rental, purchase of a business facility from a relatively inexpensive and then turning it into a warehouse, and so on. It is impossible to say unequivocally what is better – rent or purchase, because it is important to consider each specific business. Practice shows that in many cases turning to outsourcing services is more profitable from a financial point of view.

 

What other classifications of warehouses are there

 

Above were listed the main varieties that occur most often. But there are other gradations, which will affect how the work of the enterprise will be organized. So, much depends on the level of technical equipment. There are storage facilities with full automation, with partial control through mechanization, fully mechanized, automated. Of course, the more reliable automation is involved in the work, the lower the risk of loss, damage to the goods, fires, man-made disasters that occur because of the human factor.

In addition, depending on the place in the logistics chain of warehouse logistics facilities will be divided into those that are designed for trade companies or for intermediaries, for other logistics companies or for companies-forwarders. And yet, there are warehouses that are designed exclusively for manufacturers.

 

Why is it important to know the basics of warehouse logistics

To date, experts in this field are trained in many educational institutions, including higher education. Getting a job in logistics at institutions of higher education is quite justified, since there is a tendency to tighten the requirements regarding the movement of raw materials, products, goods. Competition in this area is also increasing. Quite recently very strict ecological standards were introduced, as well as sanitary and hygienic, fire safety and many others. That’s why specialists educated at higher educational institutions and possessing certain practical experience are most valued. However, there will be many who want to know what the basics of warehouse logistics, that is, to be trained on a reduced program, where the emphasis is mainly on practice. Features of such training will help to understand the following table:

 

Emphasis on knowledge of legal basicsNumerous standards, storage requirements, transportation, dealing with customer claims, lawsuits, appearing in court as a plaintiff or defendant – all of this occurs quite often in practice, so warehouse logistics requires specialists with knowledge of the legal basics
Emphasis on cost optimizationCost reduction can safely be called a trend that interests the vast majority of entrepreneurs, including representatives of small, medium and large businesses

 

Learning the basics of warehouse logistics, it will be possible to focus on these two important components. The acquired knowledge will be useful for the organization of companies that work in the field of extraction of raw materials, processing, production of goods, equipment, products and not only.

As a basic component of the basics of warehouse logistics also appears the ability of the business to reduce risks. This means the need to introduce automated accounting systems, control. Provides control over the movement of goods, people, speed and quality of loading and unloading. This means that it is necessary to deal with large volumes of data, which are received for analysis in a single point in real time.

 

Ensuring proper control in warehouse logistics

Information technology is actively being introduced in this field. That is why people professionally involved in this field must also know the technical basics. As a rule, control is carried out in several directions:

 

  • Control over the safety of goods.
  • The presence of sufficient inventory levels.
  • The accuracy of employees’ actions. This includes assessing their movement around the facility, the time they entered and left the area.
  • It is important to monitor how fast the loading and unloading is, and how much product comes in over a certain period of time, such as a few hours, a day, or a week. How often customer requests are received, how quickly they are processed, and how picking is done is taken into account.

 

It is impossible to imagine warehouse logistics and without the normal provision of document flow. This is critical for business owners to have a clear idea of the volume of work, income and expenses, losses and other factors. Plus, it is important for the timely and correct preparation of documents, which will later be submitted to the tax and other supervisory controlling instances.

 

What will be the warehouse logistics in the future

 

If we compare the way warehousing logistics was organized at the beginning of its development, i.e. in the 70s of the last century, it is clear how great the difference with the present time is. Experts believe that in the future, this area will also transform. In particular, there will be more and more advanced management, monitoring and control systems. The benefits of investing in automation will become more and more evident, although it is considered to be a rather expensive process. This is why many companies are moving to automation not immediately, but gradually, step by step.

The majority of experts are still confident that professionals working in logistics will be among the top most highly paid professions. This is justified by the great responsibility that is imposed on them and the high requirements, i.e. knowledge of the law, technical fundamentals, the ability to make correct and quick decisions in critical situations, and so on.

Людмила Логистик УКР

Эксперт в сфере транспорта и логистических процессов НАН Украины. Участница экспертной рады при министерстве транспорта и инфраструктуры