NIOS Class 10 Logistics & Supply Chain Management Chapter 18 Warehousing Operation Management

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NIOS Class 10 Logistics & Supply Chain Management Chapter 18 Warehousing Operation Management

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Warehousing Operation Management

Chapter: 18

INTEXT QUESTIONS 18.1

1. Warehouse is derived from German  warehouse meaning __________.

Ans: “Large Impersonal Institution”

2. According to historical facts and data, Greeks built the first ever warehouse.

(A) True.

(B) False.

Ans: (B) False.

3. Warehouse is normally used by.

(A) Manufacturer.

(B) Distributor.

(C) Wholesaler.

(D) All the above.

Ans: (D) All the above.

4. In which warehouse type, goods are moved quickly.

(A) Coastal areas.

(B) Airports.

(C) Trains.

(D) Defence forces.

Ans: (D) Defence forces.

INTEXT QUESTIONS 18.2

1. __________ warehouses are built and managed by the government and semi government bodies.

Ans: Public warehouse.

2. Private warehouses are built by the individuals to improve the margin of the company.

(A) True.

(B) False.

Ans: (A) True.

3. Who are the major beneficiaries of cooperative warehouses?

(A) Manufacturers.

(B) Exporter.

(C) Wholesalers.

(D) Farmers.

Ans: Farmers.

4. Movement in distribution centres is high compared to other warehouse characteristics.

(A) True.

(B) False.

Ans: True.

INTEXT QUESTIONS 18.3

1. __________ is the basic function of a warehouse.

Ans: Store goods and take them back later.

2. Goods and commodities stored in the warehouse are used as collateral security to get the loan offers.

(A) Yes.

(B) No.

Ans: (A) Yes.

3. The warehouse can issue a certificate in the name of the depositor, which is called as __________.

Ans: Warehouse keeper’s warrant.

4. Identify the Value Added Services provided in the warehouse.

(A) Labelling.

(B) Barcoding.

(C) Quality Checking.

(D) All the above.

Ans: (D) All the above.

INTEXT QUESTIONS 18.4

1. The warehouse keeper issues a document in the favour of the actual owner of goods.

(A) Yes.

(B) No.

Ans: (A) Yes.

2. Expand DO.

Ans: Delivery Order.

3. The place where goods are kept to load into ships is called _________.

Ans: Dock.

4. Transfer of ownership is possible in case of DO.

(A) Yes

(B) No

Ans: (A) Yes.

INTEXT QUESTIONS 18.5

1. __________ must be prioritised while choosing a warehouse for your company.

Ans: Location.

2. Timely delivery of the goods to customers is the basic goal of any company.

(A) True.

(B) False.

Ans: (A) True.

3. Order processing is not improved by the availability of goods on time.

(A) True.

(B) False.

Ans: (B) False.

4. Dividing the responsibilities among the employees is called as__________.

Ans: (A) True.

INTEXT QUESTIONS 18.6

1. Location of the warehouse decides how efficiently the company is performing.

(A) True.

(B) False.

Ans: (A) True.

2. Workforce availability, labour skills and costs are directly associated with__________.

Ans: Local demographics.

3. When it comes to warehouses, __________will be the major transportation medium.

Ans: Trucks.

4. When it comes to utility costs, the activities are dependent on one another.

(A) Yes.

(B) No.

Ans: (A) Yes.

INTEXT QUESTIONS 18.7

1. Good housekeeping is required to maintain the condition of the floor regularly to avoid issues.

(A) Yes.

(B) No.

Ans: (A) Yes.

2. __________ are the easy and cost efficient way to keep your warehouse organised by identifying the nature of the workplace and products.

Ans: Signs & Stickers.

3. Expand SOP.

Ans: Standard Operating Procedure.

4. Fire alarms and smoke alarms should be tested regularly.

(A) Yes.

(B) No.

Ans: (A) Yes.

INTEXT QUESTIONS 18.8

1. __________ is the basic challenge in warehousing.

Ans: Lack of Communication.

2. Tracking inventory helps you in getting control over stock.

(A) Yes.

(B) No.

Ans: (A) Yes.

3. Inaccurate purchase order results in losing __________of the company.

Ans: Customer Base.

4. Which are the below factors that decide the demand and movement of goods?

(A) Seasonal products.

(B) Weather conditions.

(C) Government policies.

(D) All the above.

Ans: (D) All the above.

TERMINAL EXERCISE

1. What are the various types of warehouses? Explain

Ans: The types of warehouse are given below:  

(i) Public Warehouse: This type of warehouse is built and managed by the government and semi government bodies in order to help the small and medium business people who do not have enough financial power to build their own warehouses and most probably small business people do not require their own warehouse as their requirement is very low. To promote industrial movement of goods and inland trade, it helps the retailers/traders to utilise it and helps in improving their trade activities further by paying normal amount of fee for their usage. At times, those who have warehouses on their own will also use these types of warehouses to meet sudden demands. This type of warehouses is mainly used by manufacturers, importers and exporters to meet sudden demands like festival season, to avoid an out of stock of raw material they use these warehouses to manage.

(ii) Private Warehouse: This type of warehouse is used by individuals who manage their own chain of activities. The flow of raw materials and finished goods is high which requires more space to keep the products. By renting or by using government and other types of warehouses, one should build their own because the cost incurred will be high which you can build your own and regulate which can improve your profit margin. And location plays a crucial role as it differs from the industry you are into as a farmer requires a warehouse, small or medium nearby his fields, wholesalers/retailers look to keep their warehouse close to the customer area, etc. which holds its difference among the work carried out.

(iii) Bonded Warehouse: Bonded Warehouse is managed and controlled by the government as well as private firms. Bonded warehouses are mostly used to store imported goods and cargo for which import duty is still to be paid and cleared. To run a bonded storage warehouse, private companies should obtain a licence to run. The main purpose is to control the taxes to be paid by private firms to the government on time. 

Bonded warehouses are subject to two types of taxes: 

(a) Excise duty. and 

(b) Custom duty.

(iv) Co-Operative Warehouse: As the name implies, it is built and managed by co-operative societies which provide their services to small and medium based companies for their goods movement. Without considering much on the profit margin, they provide rates at an affordable price for their members. Major beneficiaries of these types of warehouses are farmers, who store their food grains, vegetables,fruits and others.

(v) Distribution Centres: This type of warehouse has a large storage area where goods of multiple customers go in and out within a short period of time, whereas in other cases of warehouses, goods are kept for weeks and even for months. In order to reach the customers quickly,  This type of warehouse acts as a distribution centre where perishable and food items are moved out as soon as it comes in and stored. It is fully computerised as the movements are so quick to control the activities carried out. Mostly goods taken into the warehouse in the morning will be moved out by evening.

(vi) Cold Storage Warehouse: As the name implies, goods that are sensitive to temperature are stored here, mostly the goods to be kept at a low temperature are stored here. Medicines, fresh vegetables, cosmetics, and at times chemical products are kept here in order to maintain the nature of the goods. The cost incurred in cold storage is very high compared to other warehouses as the work and amount spent to manage it is very high, as machinery and labour costs are high in operating, maintaining temperature, etc where the goods are kept in refrigerated containers and racks.

2. Explain the various functions of a warehouse.

Ans: The various functions of a warehouse are: 

(i) Storage: Storage is the basic function of a warehouse which provides space for goods, inventory and equipment. Appropriate Storage Helps in minimising the wastage, gives you profit when demand arises and ensures the safety of the goods. 

It is divided into two types:

(a) Planned Storage: Estimated storage time which is framed perfectly to meet the customer demands.

(b) Extended Storage: It refers to the extra time taken than planned storage where seasonal demands, bulk purchases are the major reasons behind this extra storage time.

(ii) Safeguarding of Goods: Second most important function of a warehouse is safeguarding of goods from natural and weather conditions and also from theft and damage. It is monitored by the appointed person who takes care of the responsibilities involved. It has all the precautionary measures to safeguard the products such as from fire, floods and other climatic factors.

(iii) Movement of Goods: 

Movement of goods consists of the following activities:

(a) Inbound Activity: which refers to unloading of goods from the vehicle into the warehouse.

(b) Transfer to Storage: which refers to transferring of goods from inbound area to storage area.

(c) Order Selecting: which refers to selecting the items required to be shipped from the storage area.

(d) Outbound Activity: which refers to inspecting the goods and loading the goods for shipment.

(iv) Financing: Warehouse financing is a type of inventory financing that involves a loan provided by a financial institution to a manufacturer or to a company. Here, goods and commodities stored in the warehouse are used as collateral security to get the loan offer. When the goods are transferred to the warehouse, the depositor of the goods gets a receipt which acts as a proof that the total value of goods is stored in the Warehouse. The warehouse can issue a certificate in the name of the depositor, which is called a ‘Warehouse keeper’s warrant’. So, while the goods are in the warehouse, you can use this certificate to get a loan.

(v) Value Added Service: Value added is some extra work involved apart from actual warehouse functions such as packing, repacking, labelling and so on. 

Some major value -added services are discussed below:

Processing: which refers to the process that certain goods are involved in to make it consumable. Seasoning of timber and polishing of paddy are the best examples here where at times warehouse owners perform this on behalf of the actual owner of goods. 

Grading and Branding: warehouses at times undertake the function of grading and branding of goods on behalf of actual owners of goods. They provide services like mixing, co-packing and repacking of goods. 

Other Services: Other value-added services include labelling, stamping, barcode printing, gift packing, quality checking, invoice printing, etc.

(vi) Information Management: Warehouse tracks all the in and out movement of goods which helps you in knowing the exact position and stock of goods and data. It helps the actual shipper/ owner of goods to read the data in a precise manner,helping in planning the upcoming goods to be stored and moved out. Error free and precise and timely information is required to make it happen. 

3. List out the various documents to be maintained in Warehouse.

Ans: The various documents to be maintained in the Warehouse are mentioned below: 

(i) Warehouse Keeper’s Receipt: This is a document issued by the warehouse keeper acknowledging the goods from the depositor. It also shows the agreement and conditions to keep the goods in the warehouse. It is not the title of goods, cannot be transferable and cannot be used as collateral security.

(ii) Dock Warrant: The place where goods are kept to load into ships is called a dock. It is the document of title of goods issued by dock authorities. It shows that the dock authorities hold the goods. To take the delivery, this document should be submitted to the dock authorities. It is transferable to third parties also.

(iii) Dock Receipt: It is the acknowledgment of receipt of goods which is issued by dock authorities to the actual owner of the goods. It does have the power of title of goods thus the authority of taking the delivery of goods is not transferable.

(iv) Delivery Order: It delivers a specific type or quantity of product and goods which the depositor mentions all the details to deliver to the person mentioned in DO and make the process as per instruction written in it. Transfer of ownership is possible in case of DO.

4. Enumerate on the importance of warehouses in business.

Ans: The importance of warehouses in business are: 

(i) Central Location for Storage: Location must be prioritised while choosing a warehouse for your company because the production gap and movement of goods from one place to another is reduced significantly. Also distributing the goods to warehouses, warehouses to customers becomes easy when the location is favourable to all the departments. For example, a warehouse which is located in the centre of the city is very advantageous to the shipper in moving the goods from one place to another and helps in delivery of goods to the customer in time.

(ii) Improved Order Processing: Timely delivery of the goods to customers is the basic goal of any company in the world. To achieve this, warehouses play an important role. Availability of a warehouse gives you the upper hand in storing the goods and products, ready and safe and also available to move at any time. This allows the shipper to deliver the goods to the customer immediately when he places an order. This reduces the movement time more and the order is made in time. Loss of customers and business due to late delivery is avoided by the help of warehouses.

(iii) Extra Space: Even though you have your own warehouse, to match up the demand and when you increase your production, you will need an extra space. Thus, warehouses provide you an advantage during busy times. You can store your goods by giving a storage fee to the warehouse until your customer starts ordering your goods.

(iv) Improved Production Quality: Basically, the quantity of goods is monitored by warehouses. Adding a point extra,

by an effective tracking system, working along with suppliers and other participants, you can regulate and monitor the quality of raw materials and finished goods. This can be possible by identifying and isolating the defective ones during storage and production and making necessary adjustments, which helps in improving the standard of the final product.

(v) Risk Management: Rise in prices or price fluctuations are common in any type of business. This mainly happens when the supply is more than the required demand which incurs huge losses to the company. Warehouses can be efficient and helpful during these times, where you can store your goods when there is less demand and sell it in the market when the demand arises, thus improving the profit margin of the company. Not only for normal goods, you can also perishable goods thus avoiding damage and wastage of products.

(vi) Task Delegation: You can manage the company by making production, sales and marketing, inventory, transportation and customer satisfaction on your own. With the warehouse option available you can divide your work and responsibilities among your company staff which saves you from spending too much money and time and each one the employees can look into their work effectively.

(vii) Faster Shipping and Delivery: Customers expect delivery on time irrespective of any factors. To achieve this, warehouses help in making the deliveries on time by providing a list of goods available to ship and goods to be kept in stock.

(viii) Safety for Products: Warehouses have highly specified security measures and close monitoring of goods stored, which ensures the safety of your products from theft, damage and also from natural calamities as warehouses are built effectively to withstand all those disasters, fire accidents and other man-made disasters included. 

5. Explain various factors associated with the location of a warehouse.

Ans: Location of the warehouse decides how efficiently the company is going to perform all the activities in improving the profit ratio. When it comes to location, right analysis is to be done on various areas before choosing it. Let us discuss the basic criteria for choosing a warehouse.

(i) Rent, Rates and Taxes: Cost factor will be the major point to look at as when you make any mistake here, it will affect your profit level. The basic rents and rates differ from place to place according to the warehouse located in the city area or in outer of the city, owners of the warehouse, size and facility of the warehouse. If the warehouse avails tax benefits and incentives from the government, it will be helpful for the Users. 

(ii) Workforce Availability, Labour Skills and Costs: Workforce availability, labour skills and costs are directly associated with local demographics. You cannot find the right skills at the right price everywhere in your surroundings. There should not come a workforce gap during the activities as it may reduce the customer satisfaction level and productivity of the company in major.

(iii) Roads, Highways and Traffic Flow: Accessibility to roads was also to be considered mainly as you concentrated more on location and workforce alone, and if you cannot move the product in and out on time, the business will be lost. When it comes to warehouses, trucking will be the major transportation medium for all purposes.

(iv) Proximity to Airport, Railway Stations and Ports: It may not be required for all the warehouse users. If the main consignment is to be imported by airlines, you should have your warehouse nearest to the airport to carry out the activities. For that, you have to find the best possible route to reach the airport quickly, traffic level, condition of the roads, at what time you are going to take your goods and so on. Same conditions should be adapted when you export/import via rails and ships. It helps in moving the goods as quickly as possible by cutting down the extra time & cost incurred, when the distance to reach the customer is less and it is done on time.

(v) Market and Local Environment Factors: Location which is nearby to reach suppliers, manufacturers and customers is

also one of the basic points to be considered along with local environmental factors. It helps delivery to customers on time, decreased transportation costs and improved responsiveness. Local environmental factors such as weather conditions (whether the area is exposed to volcanos, floods, tornadoes and earthquakes) and local conditions (traffic congestion, noise pollution) also to be analysed.

(vi) Building Availability and Utility Costs: In case you are shifting from one location to another due to less business, you should be aware of moving from the current warehouse location another on time nearby which helps in carrying the workforce and enhancing the responsiveness as before. And when it comes to utility costs, the activities are dependent on one another. For example, refrigerated warehouses are dependent on water and electricity, which are demanding and may incur high costs for your operations.

6. Explain in detail about warehouse safety aspects.

Ans: Warehouses are required to Implement a safety plan but it should be executed and checked regularly, which avoids injuries and disasters. 

Here are some safety aspects to be noted down during warehouse activities:

(i) Ensure Safe Equipment Usage: Forklifts and hydraulic equipment should only be used to transport bulk volume of goods. The handlers should be provided with adequate training for handling the equipment and periodic overhauling of equipment has to be done.

(ii) Eliminate Potential Safety Hazards: Keeping the floors free from slips, liquid spillage and cracks are also important  as other factors as this may end in serious injuries to workers as well as to machineries too. Good housekeeping is required to maintain the condition of the floor regularly to avoid any mishaps happening.

(iii) Providing Proper Training: Providing proper training on the activities carried out creates a safe environment for the worker and awareness of the consequences helps to follow the SOPStandard Operating Procedures.

(iv) Proper Clothing: Improper clothing may cause huge injuries and consequences such as getting caught in the machinery, racks and shelves, etc. are some of the common mistakes happening but the outcome is too dangerous. It may be caught with fire, electric shock which results in serious injuries to self and others. It is always advisable to wear safety helmets, shoes and reflector jackets inside warehouses.

(v) Shelf Safety: It is very essential in analysing the weight and capacity of the racks and shelves it can hold. When you place the product or goods more than its weight holding capacity, it may fall on the workers, machinery, or even to the ground causing damage to both the goods and area it falls. It is very mandatory to check it regularly.

(vi) Identification and Marking of Hazardous Zones: Signs and stickers are the easy and cost efficient way to keep your warehouse organised and keep you safe from disasters. Labelling of racks, materials and equipment helps to identify the nature of it and easy to carry out the operations by the workers, avoids them from causing injuries and loss to the company.

(vii) Workers: operating the vehicles should be trained well in order to avoid accidents and injuries during operations. Operating with minimal speed, avoiding unnecessary reversing whether it is trucks or forklifts, helps in avoiding injuries.

(viii) Vehicle Safety: Workers who are operating the vehicles should be trained well in order to avoid accidents and injuries during operations. Operating with minimal speed, avoiding unnecessary reversing whether it is trucks or forklifts, helps in avoiding injuries.

(ix) Carrying Out Fire Safety Drills: Testing fire and smoke alarms, installation of emergency lights during evacuation and carrying out safety drills helps the workers to maintain a safe Environment.

(x) Ventilation: Limited air supply results in affecting the health of employees and vehicle exhaust which is to be checked at regular intervals, helps you to find out if any hindrances in ventilation areas around the warehouse. Having enough ventilators around helps you to work even more efficiently.

7. Give a brief description of the various challenges in warehouse operations.

Ans: The various challenges in managing warehouse which are listed below:

(i) Communication: Lack of communication is the basic challenge in warehousing, which is the base for planning and executing the shipments quickly. Proper communication with all the departments are required to ensure smooth movement of activities.

(ii) Time Management: Effective time management should be done in picking, packing and shipping of goods to avoid delays which may impact on business.

(iii) Inventory Tracking: Tracking of goods and maintaining the record of inventory which is updated regularly helps in control over stock and shipped items. Inventory Tracking also forms the basis for identifying stock out situations in advance and avoiding it.

(iv) Customer Satisfaction: It is always a tough task to satisfy the customers by meeting their expectations. Maintaining right product, inventory, quick response to customers and timely action for delivery helps in attaining customer satisfaction.

(v) Repeated Process: Repeated process in movement of goods and inventory inside the organisation consumes more time and cost which could be avoided by assigning the right person to monitor.

(vi) Product Diversification: Eliminating the products which are out of field and updating to current trends in producing the products and maintaining them helps in improved profit.