Stores and

warehousing
Warehouse
• A suitable space is provided to raw materials, handling
of raw materials, and packaging of raw materials
required for manufacturing, this space is known as
warehouse.
Various area of warehouse
• Receiving area
• Inspection area
• Storage area
• Rejected material area
• Dispensing area
Type of Warehouse
1.Public Warehouses:
These are operated by third-party logistics (3PL) companies and offer
storage space and services to multiple clients on a rental basis.
2.Private Warehouses:
Owned and operated by individual companies for their exclusive use, these
warehouses offer complete control over storage and handling processes.
3.Distribution Centers:
Primarily used for receiving, storing, and distributing products to retailers or
directly to customers. They often focus on high-volume throughput and fast
order processing.
4.Temperature-Controlled Warehouses: Designed to
store goods at specific temperature ranges, such as
refrigerated or frozen warehouses for perishable items
like food and pharmaceuticals.
5.Bonded Warehouses: Authorized by governments to
store imported goods without payment of customs duties
until the goods are released for domestic sale or re-
export.
6.Automated Warehouses: Utilize advanced robotics,
conveyors, and automated storage and retrieval systems
(AS/RS) to handle goods with minimal human
intervention. They are efficient for high-volume
7. Cross-Docking Warehouses: Goods received at one dock are
immediately transferred to outbound shipping docks, often without
being stored in the warehouse. This minimizes storage time and
handling costs.
8. Specialized Warehouses: Cater to specific industries or types of
goods, such as hazardous materials storage facilities, cold chain
warehouses, or e-commerce fulfillment centers.
9. E-commerce Fulfillment Centers: Optimized for picking, packing,
and shipping individual items for online orders, typically featuring fast
order processing and high inventory turnover.
10. Retail Warehouses: Located near retail outlets, these
warehouses facilitate just-in-time delivery of goods to stores, reducing
inventory holding costs for retailers.
Incoming material control
• Incoming material control refers to the processes and systems put in place to
manage and regulate the arrival of materials or goods into a facility, such as a
warehouse, manufacturing plant, or distribution center.
Here are some key aspects of incoming material control:
1. Receiving Process: Establishing standardized procedures for receiving materials,
including documentation, inspection, and verification of incoming shipments
against purchase orders, packing lists, or other relevant documents.
2. Quality Inspection: Conducting thorough quality inspections of incoming
materials to ensure they meet specified quality standards and are free from defects
or damage. This may involve visual inspections, measurements, testing, and
sampling.
3. Documentation and Record-Keeping: Maintaining accurate records of
incoming shipments, including details such as supplier information, quantity
received, condition of goods, inspection results, and any discrepancies or issues
identified during the receiving process.

4. Inventory Management: Updating inventory records and systems to reflect the

receipt of new materials, including location assignment, stock quantity updates, and
integration with inventory control systems.
5. Storage and Handling:

6. Communication and Coordination:

7. Supplier Management:

8. Training and Compliance:

9. Continuous Improvement:
Waste materials can be classified into three categories:

• Obsolete – These materials/equipment hold an economic value and

are not damaged, but are not useful to the company for a longer
duration for its operations on account of reasons, such as changes in
process, product line, materials, etc.
• Surplus – These materials/equipment do not have immediate use, but
have been amassed due to faulty planning and purchasing. But they do
have a usage value in the future.
• Scrap – This refers to the process wastage, such as borings, turnings,
flashes and borings, which have an end use and hold commercial
values. So, they need to be discarded periodically.
Rationale for generating and accumulating Obsolete,
Surplus and Scrap Items

• Changes in Product Design – This can result into some of the items becoming
invalid as far as the final product is concerned. Consequently, the entire stock of
such items becomes either surplus or obsolete.
• Rationalization – At times, raw materials are rationalized in order to reduce
variety and simplify the procurement process. The process of rationalization
regards some items to be surplus or obsolete.
• Faulty Planning – In the event the marketing department has made a wrong
projection on sales that could be on the higher side, material planning needs to
focus on sales forecasts that can lead to generating surplus items. Another cause of
accumulation could be wrong indenting through user departments.
• Wrong Purchase Practices – Sub-optimizing decisions taken without
having to taken care of related factors also lead to obsolete and surplus
stock items. For instance, buying products in bulk quantities to
compensate for discounts and economic transportation without
considering factors like their shelf life, storage space requirements and
technological changes again, can leader to accumulating surplus and
obsolete stock items.
Value Analysis
• Value analysis is a set of techniques, knowledge, and skills used to improve the value of a product by
eliminating unnecessary costs or improving its functions without compromising its quality, reliability,
and performance. It involves understanding the components of a product and related costs.
• The Value is of Four Types

• 1. Cost Value: It is sum of all costs incurred in manufacturing the product. The cost value is the sum of raw
material cost, labour cost, tooling cost and other overhead costs to produce the product.

• 2. Exchange Value: It is the measure of all the properties, and features of the product which make the
product possible of trading (exchanging) with other products.

• 3. Use Value: It is that value of the product which constitutes the amount of its cost included to make the
product work.

• 4. Esteem Value: is that amount of cost included into the product to enhance its customer appeal (desire to
own) .
Value is the relationship between cost and quality and can be expressed by a simple
equation.
• Value = Quality (need performance (P))/ Cost (C)

• Thus, the value can be improved by several means.

1. Decreasing costs, while ensuring same level performance.

2. Enhancing performance at same cost
3. Decreasing cost and Increasing performance
4. Both performance and costs increasing. But performance increases faster than PT
cost.
Benefits of Value Analysis

• Reduce costs;
• Maintaining high quality;
• Provide an opportunity to use new technologies;
• Eliminate waste;
• Encourage new ideas;
• Improve Brand image
• Improve design.
VALUE ANALYSIS AND VALUE ENGINEERING

• Though the two terms are used synonymously and underlying

philosophy is same, i.e., unnecessary cost elimination, there is a
difference between the two. The difference lies in time and the phase
of product life-cycle at which the technique is applied.
• Value Analysis is applied to the existing product with a view to
improve its value. It is analysis after the fact and it is a remedial
procedure. Value Engineering is applied to the product at the design
stage and thus, ensures prevention rather than elimination
WHEN TO APPLY VALUE ANALYSIS

One can expect very good results from application of value analysis at the proper time and correct
phase of product. Life cycle. V.E. should be applied in case of the following indications:

• 1. Company's products are loosing in the market and there is a decline in sales

• 2. Company's products are priced higher than the competitors

• 3. New design of products being undertaken

• 4. Symptoms of disproportionate intrease in cost of production

• 5. Decreasing profitability and retµrn on investment (ROI)

• 6. Company failing to meet its delivery commitment

STEPS IN VALUE ANALYSIS