Warehousing effectiveness can be improved by adopting scientific methods and by taking the support of IT. In the larger context, however, warehousing effectiveness depends squarely on right policies of physical distribution.
Scientific warehouse layout in itself facilitates warehousing effectiveness. The layout/design must be suitable for the product(s) concerned and the nature of storage and in-out operations.
Warehousing effectiveness also improves when the handling and movement of items within the warehouse is minimized. This applies especially to large warehouses and products involving extensive storage, receiving and issue operations. Every time an item is moved within the warehouse, it means an opportunity for damage to the item; and each lifting of the item fatigues the package.
Systematic stocking of items is another factor. If the items of high demand, with high frequency of in-out operations, are kept in the front and the relatively slower moving items in the rear, it will facilitate smooth operations and also help reduce the overall costs of warehousing. It is such matters of detail that make the real difference between poor and good warehousing.
Elements of Inventory Costs
| • Interest on capital tied up in the inventory • Warehouse rent • Staff salaries • Insurance • Rates and taxes • Stationery | • Postage and communication charges • Administrative overheads • Costs of handling, unloading and stacking • Loss due to damage and deterioration while on storage • Cost of order processing/record keeping/accounting |
In many cases, warehousing as a whole becomes inefficient on account of unreliable sales forecasts. When actual sales show great divergence from the forecast, any warehousing plan naturally goes haywire and its effectiveness suffers a setback.
