dissertation azaf cov uni
TRANSCRIPT
M99EKM DISSERTATION-MSc SUPPLY CHAIN MANAGEMENT Page 1
DESIGNING INTERNATIONAL
WAREHOUSE FOR SEMI-FINISHED WOOD
By
ASAF RASHEED
September 2011
The work contained within this document has been submitted by the student in
partial fulfilment of the requirement of their course and award
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ABSTRACT
The project throws its light mainly on the designing of warehouse for storage of semi-
finished wood parts. In order to attain this ultimate goal the researcher has created the
following objectives. As the research location is China it is very important to analyse the
political issues and other formalities of establishing a warehouse in that country. Another
major objective is to review the treatment methods for the protection of the wood parts from
damage. Finally the researcher aims to find better methods to design a well structured
warehouse suitable for wood products.
To attain these objectives the researcher had to conduct interviews, critically analyse the
literature review about the layout and design of a well structured warehouse and also
evaluated a case study. This helped the researcher to create an overall picture for the
designing a warehouse which meets the above mentioned objectives.
The main conclusion derived from this project was that an advanced, well structured and cost
effective warehouse implementation can be achieved only through proper study of the
political, economical and environmental condition of the country where the warehouse is
going to be designed.
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TABLE OF CONTENTS
ABSTRACT ............................................................................................................................................... 2
ACKNOWLEDGEMENT ........................................................................................................................... 6
INTRODUCTION ....................................................................................................................................... 7
1.1 BACKGROUND OF THE PROJECT ................................................................................................ 7
1.2 PROBLEMS ....................................................................................................................................... 7
1.3 AIM AND OBJECTIVE OF THE RESEARCH ................................. Error! Bookmark not defined.
1.4 RESEARCH QUESTION .................................................................... Error! Bookmark not defined.
1.5 RESEARCH OBJECTIVES ................................................................ Error! Bookmark not defined.
1.6 PERSONAL INTEREST ..................................................................... Error! Bookmark not defined.
2. LITERATURE REVIEW .......................................................................... Error! Bookmark not defined.
2.1 INTRODUCTION ............................................................................... Error! Bookmark not defined.
2.2 WHAT IS WAREHOUSING .............................................................. Error! Bookmark not defined.
2.3 TYPES OF WAREHOUSES ............................................................... Error! Bookmark not defined.
2.3.1 PRIVATE WAREHOUSES .......................................................... Error! Bookmark not defined.
2.3.2 PUBLIC WAREHOUSES ............................................................. Error! Bookmark not defined.
2.3.3 BONDED WAREHOUSES ........................................................... Error! Bookmark not defined.
2.4 BENEFITS OF WAREHOUSING ...................................................... Error! Bookmark not defined.
2.5 FUNCTIONS OF WAREHOUSING AND WAREHOUSING FUNDAMENTALSError! Bookmark not defined.
2.5.1 BASIC WAREHOUSING FUNCTIONS ................................... Error! Bookmark not defined.
2.5.1.1 RECEIVING RAW MATERIALS ........................................ Error! Bookmark not defined.
2.5.1.2 TRANSFER OR PUT AWAY ............................................... Error! Bookmark not defined.
2.5.1.3 STORAGE ............................................................................. Error! Bookmark not defined.
2.5.1.4 ORDER PICKING .............................................................................................................. 16
2.5.1.5 PACKING ........................................................................................................................... 16
2.5.1.6 SHIPPING FINISHED GOODS......................................................................................... 17
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2.6 THE NEXT GENERATION WAREHOUSES ................................................................................ 17
2.7 FRAMEWORK FOR DESIGNING WAREHOUSE LAYOUT ...................................................... 18
2.8 STEPS IN DESIGNING THE WAREHOUSE FRAMEWORK ..................................................... 19
3. RESEARCH METHODOLOGY ............................................................................................................ 26
3.1 INTRODUCTION ............................................................................................................................. 26
3.2 RESEARCH PHILOSOPHY ............................................................................................................ 26
3.2.1 POSITIVISM PHILOSOPHY ..................................................................................................... 27
3.2.2 INTERPRETIVISM PHILOSOPHY ........................................................................................... 27
3.2.3 PHENOMENOLOGY PHILOSOPHY ....................................................................................... 27
3.3 RESEARCH APPROACH ................................................................................................................ 28
3.3.1 INDUCTIVE APPROACH ......................................................................................................... 28
3.3.2 DEDUCTIVE APPROACH ........................................................................................................ 29
3.4 RESEARCH METHOD .................................................................................................................... 29
3.4.1 QUALITATIVE METHOD ........................................................................................................ 29
3.4.2 QUANTITATIVE METHOD ..................................................................................................... 30
3.5 DATA COLLECTION METHOD .................................................................................................... 30
3.5.1 PRIMARY DATA COLLECTION METHOD ........................................................................... 30
3.5.2 SECONDARY DATA COLLECTION METHOD ..................................................................... 31
3.6 DATA ANALYSIS METHODS ....................................................................................................... 32
3.6.1 DESCRIPTIVE ANALYSIS ....................................................................................................... 32
3.7 RELIABILITY AND VALIDITY ....................................................... Error! Bookmark not defined.
3.8 STRENGTH AND LIMITATIONS OF THE RESEARCH .............. Error! Bookmark not defined.
3.9 SUMMARY .................................................................................................................................... 33
4. DATA ANALYSIS .................................................................................... Error! Bookmark not defined.
4.1 INTRODUCTION ............................................................................... Error! Bookmark not defined.
4.2 STANDARD COMPANY PROFILE ................................................. Error! Bookmark not defined.
4.3 PROBLEMS IN STORAGE OF WOODS ....................................................................................... 39
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4.4 SUMMARY ........................................................................................ Error! Bookmark not defined.
5. INTERVIEW QUESTIONS ................................................................................................................... 41
5.1 OUTCOMES OF THE INTERVIEW ........................................................................................... 44
6. DISCUSSION ............................................................................................................................................. 45
7. CONCLUSION ........................................................................................................................................... 47
7.1 OBJECTIVES OF THE RESEARCH ............................................................................................................. 47
8. RECOMMENDATIONS .............................................................................................................................. 49
REFERENCE .............................................................................................................................................. 51
LIST OF FIGURES
Figure 1: Lay out of storage in STANDARD company ............................... ...............39
LIST OF TABLES
Table 1: Colour coding used by STANDARD company ............................................ 38
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ACKNOWLEDGEMENT
I take this opportunity to thank my supervisor Dr. JIM ROWLEY for his guidance and
support from the initial stage to the end of the of project work. The feedbacks provided by my
supervisor made my task much lighter and easy to accomplish.
My heartily gratitude goes to my tutors and all my friends who helped me to finish this
project successfully I also take this opportunity to thank my parents who provided me with
their moral and financial support throughout my masters programme. I am thankful to all my
batch mates who have provided assistance in completing my final project and other modules.
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CHAPTER 1
1. INTRODUCTION
1.1 BACKGROUND OF THE PROJECT
A warehouse is a planned and well arranged space for the handling and storage of goods and
materials (FRITZ Institute). In general we can say that warehouses are the focal point for the
product and information flow between the sources of supply and beneficiaries. However, in
humanitarian supply chains, warehouses vary greatly in terms of their characteristics and
their roles. This research is not a general study of designing and functioning of common
warehouse, but is of designing a well organised and structured warehouse for semi-finished
woods.
In this project the literature review tells about the existing body of knowledge on designing a
warehouse focused on storing semi-finished wood products which is used for the
manufacturing of guitar. It also describes the history, layout, general principles, basic
functions and advantages of warehouse. For the better delivery of the listed objectives on the
project, the researcher has conducted an interview and included valuable case study.
1.2 PROBLEMS
Political issue
As the warehouse is planned to open in another country (China) there will be many problems
regarding its licensing.
Decaying of wood
As the wood has to be kept in appropriate humidity and temperature there is a chance of
fungus growth and colour change in wood.
Space, storage system
Design of this warehouse is more complicated compared to other warehouse designs, because
the product is wood. Semi-finished wood needs special care and attention and need more
space than a normal warehouse and needs a systematic storage rack. Warehouse spaces must
also be flexible to accommodate future operations and storage needs as the mission changes.
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1.3 AIM AND OBJECTIVE OF THE RESEARCH
Research Aim
The aim of the project is to design a well structured and organised warehouse for the storage
of semi-finished wood materials.
1.4 RESEARCH QUESTIONS
The project is carried out for finding out the results of following questions listed below:
What are the terms and conditions of the government of China in opening a
warehouse?
What are the preservative methods used to prevent wood from fungus growth?
(hazardous chemical storage)
How can we design a warehouse which is suitable for the storage of semi-finished
wood products? (Heated and unheated general warehouses, controlled humidity
warehouses)
1.5 RESEARCH OBJECTIVES
The main objectives of the report are:
To analyse the political issues and formalities
Critically reviewing the preventive methods to treat wood from damages
To understand designing layout of a well-structured warehouse suitable for the wood
products
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1.6 PERSONAL INTEREST
The researcher is having a guitar manufacturing unit in China and currently the raw materials
for the product are exported to China. As a future business strategy, the company is planning
to open a warehouse in China in order to store the semi finished wood parts for guitars which
can be stored in aisles and racks to maximize the profit. Moreover, as a Supply Chain
Management student the research will help to add more practical knowledge to the researcher
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CHAPTER 2
2. LITERARURE REVIEW
2.1 INTRODUCTION
Warehousing is closely related with the distribution of products and is a much-neglected area
of business study. Effective warehousing process is very important for an organization to
improve its business operations. For the effective and efficient business operations we need to
design a well structured warehouse that describes its needs and uses. The overview of
designing a warehouse and its advantages are discussed and analyzed in this section with
cross checking based on the different views of authors. This part of the work gives an
overview about the importance of designing an effective warehouse in this modern era. Term
„warehousing‟ is used for keeping and handling the material which are the key elements in
our industrial and economic system. (James A. Tompkins, Jerry D. Smith, 1998)
Industrial revolution makes a big change in the concept of production of goods. This resulted
in mass production and changes in concept of manufacturing facilities from receiving to
shipping. Mass production of goods and raw materials drag the world into a new aspect called
warehousing. At the first stage of mass production goods were manufactured according to the
sales forecast. The goods and raw materials that produced according to the forecast were
usually placed in the warehouse of the factory. When the distribution system developed, the
factories began to place their warehouse closer to their targeted market areas. As time and
years passed away the concept of distribution centres also grown beyond their limits. (James
A. Tompkins, Jerry D. Smith, 1998)
Warehousing is either directly or indirectly interlinked with logistics. No warehousing will
happen without logistics operations. Since, from the invention of wheel, man built carts for
the movement of goods and materials. Today we are moving the materials for the
manufacturing area and in distribution of semi-finished and finished materials, on a
demanding sophisticated level. The industrial success came in to reality only by economical
movement of materials and goods. Inventory control, warehouse management and production
control are the key factors that affect the profit of an organization and these can be attained
only by following a proper warehousing methodology. The steps in warehouse methodology
deals with the systematic execution of physical storage and their retrieval activities and
processing of information needed regarding the goods stored. From the view point of material
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handling of the warehouse methodology, includes all the functions related with the storage of
goods. From a narrow sense of thinking we can say that, this involves all the movements
happening inside the warehouse. In a broader approach we can say that it involves
transportation linkage from factory to warehouse and from warehouse to market. The bridge
between warehouses to market is linked by common carriers such as railways, trucks, ships,
airlines and so on. Based on this broader aspect a warehouse is considered as „distribution
factory, (Kringel J.R,)
2.2 WHAT IS WAREHOUSING
Warehousing consist of the activities which involves the storage of goods on large scale basis
in a systematic manner and making them available suitably and easily when needed. In other
words, warehousing refers to preserving or holding goods in bulk quantities from the time
when the goods purchase or produce till their actual sale or use. In this industrial era
warehouse was defined as a useful reservoir for storing mass production (Ackerman K.B,
1997). The main function of a warehouse is to facilitate the process of storing and movement
of goods. If mass production is made for a particular product which can sell immediately,
then companies use warehouse to store the surplus stocks until they are needed by the
customers to buy. Warehousing also helps the manufacturer to stabilize the price of the
products and makes availability of the seasonal products without any delay. An effective
warehouse helps a company to reduce the cost transportation and inventory and by which
improves the services to customers. A warehouse can also drain the company‟s resources if
they are functioning in a wrong way. Beyond making the decision about the facilities to be
installed and fixing the location of the warehouse, a company must study and plan out which
type of warehouse is more effective and appropriate. (William M. Pride, O. C. Ferrell, 2011)
2.3 TYPES OF WAREHOUSES
2.3.1 Private Warehouses
The private warehouses are the kind of storage spaces which are owned and managed by
large manufacturing companies and other private peoples for their own use. Large companies
and business firms need large storage spaces on a regular basis and who can afford the
expenses, construction and maintain their own private warehouses. Big companies or
wholesaler may have a chain of warehousing firm‟s different parts in of the country. The
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private warehouses are registered and have licensed to private persons and the goods which
are operated by the licensee will only be stored in this kind of warehouses. (Farahani. R.Z
etal, 2011)
2.3.2 Public Warehouses
These are the type of warehouses which are specialized business establishment that provides
storage facilities to the public people who need to store their goods by paying a certain
amount of money. It may be owned by an individual or a cooperative society, but it want to
be registered and need a license from the government. A public warehouse is also known as
'duty paid warehouse' because of the similarity in there functioning.
Public warehouses are very useful to the people who do not have the capability to own their
own warehouse as they can meet their storage needs economically by making use of the
public warehouse, without large investment. Public warehouses provide storage facilities to
small scale manufacturers and business at cheap costs. They also provide facilities to check
the quality of goods by prospective buyers. They also permit grading and packing of goods.
The public warehouses receipts are considered as good collateral securities for borrowings.
(Joel D., etal, 2008).
2.3.3 Bonded Warehouses
These warehouses are licensed by the Government to accept imported goods for storage until
the payment of customs duty. They are usually located closely to ports. They are either
operated or functioned by the Government or work under customs authorities. The goods are
held in a bond and cannot be removed without paying the customs duty to the authorities.
Bonded warehouses are very helpful for importers and exporters. If an importer is in a
situation that he/she can‟t pay customs duty immediately after the arrival of goods he/she can
store the goods in a bonded warehouse until the time he pays the customs duty. He can also
have another option to withdraw the goods in instalments by paying the customs duty in
monthly basis. Goods lying in a bonded warehouse can be packaged, graded and branded for
the purpose of sale. (Joel D., etal, 2008).
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2.4 BENEFITS OF WAREHOUSING
Warehouses are mainly used for storage of goods. When the supply exceeds
demand the stored goods are released. On one hand it ensures a normal supply of
goods in the market and on the other hand it helps to stabilize the prices by
matching supply of goods with demand.
Warehouses are denoted as a safe custody for the storage of goods. Businessmen
can minimize the risks happening from loss, fire, theft, damage etc. If the goods
are perishable then it can be stored in cold storage. The goods kept in most of
the warehouse are generally insured to avoid the risk.
Warehouse will provides the facilities for blending, processing, grading, packing
etc, of the goods for the aim and purpose of sale. The prospective buyers have
the freedom to inspect the goods stored in a warehouse.
Warehouses provide a receipt to the owner of goods which contain all the details
of the goods stored in the warehouse. The owner can borrow money against the
security of goods by making an endorsement on the warehouse receipt. By
keeping the imported goods in a bonded warehouse, a businessman can pay
customs duty in installments. (Marketing and Sales: Warehouse, 2010)
2.5 FUNCTIONS OF WAREHOUSING AND WAREHOUSE FUNDAMENTALS
Warehousing is an important aspect of logistics and supply chain management. The designing
of the warehouse must be done in a manner that it satisfies all the requirements of the
customer service policy which spell out the customer response master plan and work supply
master plan, and serve a target stipulates by the supply master plan, and to serve a mission
stipulates by the transport master plan. The warehouse is considered as a service to satisfy all
other functions of logistics and supply chain management areas. Warehousing includes a set
of fundamental activities in common. (Frazelle E.H, 2002)
Traditionally, warehousing is treated as an overhead rather than the profitability of the
manufacturing enterprise. On one hand manufacturing management treats warehouse
management as a necessary element, while on the other hand as a non-essential element of
the manufacturing system. Today warehousing is considered as the bottle neck of the
manufacturing system and emphasized on proper planning and management and is
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considered as the most important element of the manufacturing system. (Tompkins J.A,
Smith J.D, 1988)
2.5.1 BASIC WAREHOUSING FUNCTION
SOME OF THE BASIC WAREHOUSING FUNCTIONS ARE AS FOLLOWS:-
2.5.1.1 Receiving raw materials
In this receiving function, replenishment materials coming to the warehouse by common
carriers are unloaded by assuring the quality and quantity. The major functions performed in
these functions are unpacking, inspection of goods against damages, verification of unloaded
materials against shipping invoice, and finally entering the details of receiving products into
warehouse inventory. (Van den berg, 1999) (Alexandre Dolgui, Jean-Marie Proth, 2010)
says that sometimes advance notification may or may not be informed during the arrival of
the material, goods or products, in this case advance notification want to be compared with
the consequent order. In both of these cases, the difference between the delivery and order
should be checked and analyzed. The process of quality control should be performed, once
the material or product reaches its destination and if they have any exception it should be
noted. Finally, the product is checked and registered (commonly RFID device or Bar code
system is used to perform this function) (Gwynne Richards, 2011)
2.5.1.2 Transfer or put away, and transportation resources.
This function is an act of material handling, product placement, location verification. The
transferring of material activities are performed to and from the receiving area of the
warehouse. Receiving function is determined as the interface of the warehouse with the
manufacturing units, business environment, factories and the market in general (Van den
berg, 1999). The selection of equipments used for transporting or transferring the resources
depends on the type of product involved in the warehouse. In this modern era there are
different kinds of conveyors available for the movement of pallets and cases to various parts
of the warehouse. In this modern era transportation process may be completed by using an
automated system which picks the stock or product from the conveyor when items arrive at
an assigned position. For the recognition of the items barcodes or RFID tags can be used
(Alexandre Dolgui, Jean-Marie Proth, 2010). Conveyors are mainly used in warehouses
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which having high intensity of item flow. There are also conveyors which do not need any
energy for the operation and they are commonly known as Gravity conveyors. These kinds of
conveyors are more preferable because of the low maintenance cost and investment. Belt
conveyors, skate wheel, roller conveyors are some different type of conveyors available,
these are selected according to the characteristics of item which want to be transported to the
warehouse. The gravity conveyors are equipped with switches and curves to function
different type of functions and paths. (Alexandre Dolgui, Jean-Marie Proth, 2010)
2.5.1.3 Storage
Arranging space for the storage is a fairly complex task, because of the fact that each item
has different shapes and size. Storage identifies the appropriate location and the time
period of materials until they are demanded for the usage of various purposes. (Van Den
Berg, 2000). Storage process includes sorting, transportation of product to storage
locations (which includes the process of putting together the stocks which have same
character or product that needs to be send to same customers). (Alexandre Dolgui, Jean-
Marie Proth, 2010) says some objectives want to be taken into account while selecting
storage equipments they are as follows:
Abbreviate work cycles
Drop in handling cost
Reducing the space of storage
Facilitating deliveries and shipments
Simplifying the flows which helps for avoiding flow crossing
Optimizing the work force and safety of resource
Maximizing the utilization of recourses
Minimizing the energy usage required for the operation of storage system.
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2.5.1.4 Order picking
This is a basic service provided by a warehouse to its customers. This process involves
removal of items from the storage to meet the demand of the customers. The correct
organizing of the materials help to minimize the time required to handle the process of order
picking. (Frazelle E.H, 2002). In a warehouse, order picking function is considered as one of
the most important in their warehouse distribution function. Order picking is considered as
the centre of product flow between suppliers and the customers. This function is said to be
the core function where requirements and expectations of the customer are defined and
fulfilled, where stock is allocated and shipping and documentation process are scheduled and
prepared “Order picking is defined as selecting the correct item in the correct quantity from
storage to satisfy the current customer requirements” (James A. Tompkins, Jerry D. Smith,
1998). This means that order picking is considered as the core function of warehouse
activities, where customers are free to select the products at right quality and quantity with
full satisfaction.
2.5.1.5 packing
The process of packing is an important element of the warehousing function. Literally, this
function is not directly connected with the operation of a warehouse but today packing and
unpacking of materials is an unavoidable element in the processing of the warehouse and
logistics operations (Van den Berg, 1999). All the non bulk goods must be packed such that
they can be handled by the automated packing system, and can protect from the damages
happening while transportation (acceleration and sudden breaking, grinding, rocking, shocks,
vibrations etc). They also want to be safe from damages and losses happening because of
environmental factors such as extreme heat and cold, water, rest etc. while packing the goods
appropriate markings, labelling and tagging must be done to identify the goods without any
confusions. The labels must be visible and recognizable (Kent N. Gourdin, 2001).
The packing must show the following: (Ernst F. Bolten, 1997)
The name and address of the shipper
The name and address of the receiver
Warnings of hazardous materials
The product code, identification and description
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Protective symbol services, such as temperature limits, flammable
Handling symbols, methods and equipments.
2.5.1.6 Shipping finished good
This function involves all the operations relating to the shipping of a material such as packing
of the merchandise in shipping containers, preparing the documents of the shipping, including
labelling or addressing, bill of lading, packing list, weighting of shipments for determination
of the shipping cost. (Frazelle E.H, 2002). Shipping principles include direct loading (the
reverse of direct unloading), staging in racks and preparation of advance shipping notice. For
fulfilling the entire shipping process we can also add the practices such as: Container
optimization, weight checking, container loading and void fill, automated loading and dock
management these practices will make the process of shipping more qualitative ( drawdE
200wa,ellezEH..H)
2.6 THE NEXT GENERATION WAREHOUSES:
The warehouses of next generation will emphasize on fast movement of materials and goods
rather than efficient storage. The designing of the order pick lines want to be organized in
such a way that fast moving materials can be picked with less amount of effort or personal
risk. Tomorrow‟s warehouse will be designed in a flow-through structure with equipment,
layout and emphasized on people who have flexible and capability of handling quick changes
and need highly systematic and improved transmission capacity of handling information such
that no office workers want to be there in the warehouse. (Ackerman K.B, 1997)
We can see many warehouses in this era which have an excellent performance on delivering,
strongly handling and motivating the work force and having a flexible nature with the change
in markets. But when we look at many other distribution centres we can see that there
performance is very weak, having a weak motivated work force and which have lack of
managerial and leadership qualities which results in delay of the entire processing of the
warehouse and it‟s functioning. Even though the manager works so hard in this kind of firms
his efforts remain fruitless. Ironically, the manager can‟t do anything to find the rhythm of
the organization because of his day to day problem solving. (Van Den Berg J.P, 2007)
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These problems relating to warehouse operations can be solved by a new methodology which
helps the managers to make the distribution centre into a best class operation from the current
week situation. This new methodology of operation is called Integral warehouse
management. This model is known as Integral warehouse management because of the reason,
that it considers the warehouse centres as an integral part of the logistics management.
Integral warehouse management system acts as a bridge to the new generation distribution
system in transparency, warehouse management system and collaboration. Integral
warehouse management has two methodologies which distinguish the current methodology
It concentrates on capturing detailed data by using the modern information system
It capitalizes a different way of thinking about the concept of logistics optimization
which focuses and aims on more obvious and clear directions.
Integral warehouse management system use modern information system to collect more
detailed data to evaluate the performance and analysis of the process to align the relationship
between the supply chain and logistics management. And this process also provides for
forecasting the planning, capitalize detailed data and control the methodologies. Moreover
these methods make the warehouse management system more intelligent.
TQM, JIT, KAIZEN, ECR, SIX SIGMA and LEAN (Jan vom Brocke, 2010) techniques
known as the models of current generation logistics seeks to be optimized in obvious
directions. This means that reducing the response times, reducing the inventories,
rationalizing process, and eliminating the errors. These techniques already proved to be
highly successful and more effective in achieving the organizational goals and are highly
recommendable. Integral warehousing management lead not only to reduce inventories, but
to shorten the response time, rationalizing processing steps and elimination of errors and
guides through a positive way when it is needed. (Van Den Berg J.P, 2007)
2.7 FRAME WORK FOR DESIGNING WAREHOUSE LAYOUT.
Designing of a new warehouse management system requires the firm or organization to study
about the current warehousing practices. (Van Den Berg J.P, 2007) knowing and preparing
about the layout is the most important aspect of warehouse design. Warehouse design must
be able to give solutions to several issues and problems that can improve storage facilities in
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order to support the operations of the warehouse system. Arrangement of warehouse
functional areas like determination of dock locations input/output points, determining the
dimensions and number of aisle, estimation of space requirements and orientation, making
picking zones and designing the flow of pattern are the most important factors of the design
of warehouse. (Hassan, 2002)
Designing the layout of a warehouse is a difficult task because of some reasons, firstly large
number of design decision which is very difficult to be defined and assembled. Secondly the
number of operations involved such as cross docking, picking, dual comment, benchmarking,
material handling, JIT (just-in-time), serving global market and so on (Frazelle, 2002). Such
operations and the comprehensive design of warehouse layout make the designing
complicated. Thirdly the aforementioned factors and operations interact, and such
interactions should include in the design. (Hassan, 2002)
2.8 STEPS IN DESIGNING THE WAREHOUSE FRAMEWORK
Various steps involved for an orderly designing of an efficient warehouse system are
discussed as follows:
Identifying the purpose and type of warehouse:
Firstly we want to differentiate the warehouses, whether it is a distribution centre, a public
warehouse or a manufacturing distribution centre. The type of the warehouse must specify
for designing the basement of the entire layout. This is done because to avoid un-necessary
requirements. For instance, throughput system is not necessary for a public warehouse so we
must be alert about that to facilitate design. (Jim Rowely etal, 2000) The characteristics and
objectives of the warehouse must be well defined, such as whether it serves global markets,
whether it is performing any value added services or not. So the above case will influence
subsequent steps of design. (Tompkins J.A, 2004)
Forecasting and evaluation of expected demand for warehouse:
As forecasting is a key factor in every organization, we want to forecast the capacity of the
warehouse and its demand, also need to prepare information which can be used in the future
for inventory determination, storage, trends and changes happening in demand patterns,
demand for global and domestic markets, percentage of items ordering in full or partial loads,
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changes in demand, determination of seasonal items and there management, volume and
quantity of orders and so on.
Forecasting and analysis will also reflect on operations and affected the designing of the
warehouse. For example, if the number of order is less than what we expected, and then
warehouse can easily find a remedy for batching and picking the ordered items from the
location where it is stored. The products which came under the same batch could be stored in
adjacent or close storage locations foe the easy access. The stocks will have specific
characteristics regarding the colour, smell, contamination, hazard must be studied and treated
and stores separately from other products to reduce distance and pick time. Similarly, the
items which have same bill or same kits want to be identified and treat separately from
others. (Hassan, 2002)
Establishing operating policy
The operational issue wants to be identified early during designing time. Such issue will help
to decide whether to operate warehouse as many as small warehouses which are not
dependent. This type of approaches can be seen in (Harmon, 1993). It helps in avoiding
interference of operations and order mix up which could result in the functioning of a
warehouse as single unit which deals with different products and materials. The different
operations and activities functioning inside the warehouse should be identified for developing
the layout. A decision wants to be made for storing whether the items want to be stored
individually or in batches by charactering the products according to their principles. It is
obvious that establishing operating policy before the layout helps for building a strong layout.
(Hassan, 2002)
Determining levels of inventory
Shaping the levels of inventory for the different kind of items stored inside the warehouse is
been considered as an operational decision, that will help in determining the space inside
warehouse. Determination of inventory levels depends on the analysis of demand and
forecasting. The changes in quantity, quality and timing of the demand of the customer
ordering make confusions in identifying the level of inventory and spacing of the warehouse.
In this particular case, different scenarios of the level in inventory and assignment of storage
want to be evaluated in order to calculate the reasonable inventory level estimating.
(Malmborg and Deutsch, 1988)
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Class formation
Class is obtained for the products which based on the demand, compatibility, geographic
destination and physical characteristics. Using of classes help in reducing the distance and
picking time. Distributing the items throughout the warehouse helps to reduce the congestion
of storage. Approaches to obtain such task have similarity (Hwang and Lee, 1988), coding
(Brynzer and Johansson, 1996) and correlation measures (Sharp and Frazelle, 1989)
Department forming and general layout
A warehouse is a place where different activities are happening at a single time. For the
smooth functioning of the organization for each and every function there will have separate
departments. A warehouse must have several departments that are arranged and identified for
the effective and efficient functioning of the organization. The major function of a warehouse
such as storage, packing, receiving, sorting, package and shipping is handled by the main
departments. If several functions are happening in one department, then the number of
departments wants to be reduced for their smooth functioning. For example, picking stations
may be able to perform the function of packing rather that at packing department. After
developing the primary departments, the secondary departments (maintenance and computer)
and the location of the office must be planned and implemented. The arrangement of the
machineries and other equipments using in different departments such as picking, sorting,
packing departments have to be identified and they have to follow a job layout and it has to
be implemented in different sections. (Hassan, 2002)
Storage space division or partition
Allocation of storage space and division is one of the most important functions of the
warehouse management system due to impact on productivity of pickers and congestion,
impact on movement cost and time and throughput (Ruben and Jacobs, 1999). The storage
layout of a warehouse consists mainly of parallel aisles which have goods on the both side of
the aisle. Storage is one of the major functions of the warehouse. The department of the
storage is divided in to mainly picking areas and reserve areas. This is done to facilitate
demand, reducing the movement, operations and size and type of stock. Allocation of space
and location for each products and there quantities are determined by various procedures
(Van Dan Berg, 1999). The reserve and picking areas may also be sub partitioned in to other
sub sections bases on the customer demand and the inventory level of unit load. For example,
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we can store pallets and cases by partitioning the reserve area. Simultaneously we can also
sub-divide picking areas to store different items according to their size or movement of items.
(Johnsson and Lofgren, 1994).
Material handling, sorting, and storage system
“Material handling is a system or combination of methods, labour, facilities and equipment
for packing, moving, and storing of materials to meet specific objectives”. (Kulwiec R.A,
1985). Storage, material handling and sorting are the three major activities happening in the
warehouse. These processes are accounted while, designing the aisle, space of storage,
movements happening inside the warehouse, assigning storage of the warehouse, and plays
an important role in designing the layout of the entire proposed warehouse. (Gwynne
Richards, 2011) This is a complicated step which include number of decisions such as depth
of the storage, determining the methods of the storage, assignment of machineries and
equipments to different departments and sections of the warehouse, dimensions and type of
handling different inventories, number, type and capacity of managing equipment,
determining the width, height, number and size of racks and the numbering system, sorting
system, selection, flow system designing, mechanization of all machineries and equipments
are also determined in this process. (Van Den Berg, 1999). The designers must select
compact equipments for reducing the space requirements of the warehouse.
Advantages of material handling:-
Reduction in indirect labour cost and material handling.
Improvement in the productivity
Better use of floor space, facility and productivity
Reduction in transportation cost
Less fatigue to the employees
Improved and better work environment
Reduction in bottlenecks
Greater flexibility
Improved in the safety measures and reduction in the accidents
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Improved material flow i.e. reduction in inventory and less backtracking.
(Keshava Chanda Arora, Vikas V. Shinde, 2007)
Disadvantage of material handling:-
Cost of purchasing equipment is high in most of the cases.
Highly professionals or skilled labours are needed for operating almost all type of
material handling equipments
There is a chance of big accidents and hazards, if the equipments are not well handled
and operated
Maintenance cost is very high due to regular maintenance.
High cost in operating and installation cost.
Inventory carrying cost is very high in some cases
(Keshava Chanda Arora, Vikas V. Shinde, 2007)
Designing of an aisle
Determination of the length, width, height, location and number of an aisle is a complicated
and important function of designing the layout of a new warehousing system. The aisle
designed in a warehouse may not have same size. This is done to avoid the picking time and
distance and to improve accessibility and flexibility. Designing of an aisle is said to be a
complicated task because of its impact on determination on space allocation, storage type,
needs and material handling makes the process much complicated and time consuming. For
example, narrow aisles which used for picking the products from the both side of an aisle
during its functioning (Van Den Berg, 1999). At a time wider aisle use only one side picking
from the aisle to eliminate crossing the width of aisle regularly. A short aisle needs only one
picker which helps to avoid congestion where, to a longer aisle more than one picker is
assigned for their smooth functioning. Long aisle is suitable for the operations which are
happening in fixed paths without taking any turns where as a short aisle is suitable for the fast
moving products which are operated by mobile equipments because of this all aspect we can
conclude that designing of an aisle is strongly depend on material handling, storage space and
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layout of the warehouse design (Liebeskind A, 2005). So the designers must determine
whether long aisle or short aisle is suitable for the smooth functioning of the warehouse at the
time of creating the warehouse layout.
Determination of space requirements.
Determining the space requirements inside a distribution centre is determined by various
factors such as, , number of departments and offices, size of aisle, level of inventory, height,
width and depth of storage system, size and number of equipments, type and size of sorting
system and so on. Making estimates of the warehouse also depends on overheads, availability
of land, cost of land etc. Wrong estimation of the warehouse space may lead to congestion of
operating space on one side and over space or wastage of space on the other side. So
estimation of warehouse space wants to be made carefully. (Tompkins J.A, 2004) says that
using the method of cross docking, production made in storage location and direct-put-away
we can reduce the space of warehouse at the time of receiving the materials or goods. So
many things want to be taken in to consideration while determining the requirements of the
space. (Hassan, 2002).
Determining the number and location of docks
As warehousing deals with numerous functions it‟s necessary to have many docks in a
warehouse to accommodate the materials coming from different transportation modes. It
which helps for the smooth material handling, avoids delay happening in between, help for
smooth and frequent shipping, help for cross docking without any interference of shipping
operations and it reduces the congestions happening during the stock keeping (Smith and
Tompkins, 1982). We get all these benefits if a warehouse has well structured and organized
docks facilities. Docks want to be distributed over different sides of the warehouse such that
it will help for the smooth functioning and movement of goods flowing inward and outward
directions (Hassan, 2002).
Health and safety
Warehouse is the place where numerous activities are happening at a time. Lot of safety
measures want to be take in to consideration while designing a warehouse. Some of them are
listed below:
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Warehouse must need proper ventilation facilities under all circumstance.
Provide fire extinguisher all around the warehouse, fix water sprayers and fire alarms
Need proper exhaust for janitor‟s closets, rest rooms, kitchens, battery charging
rooms, copy areas, etc.
Proper lightings need to be fixed. Allow natural lightings in the areas were possible.
Provide lighting controls, where artificial lights are adjustable according to the
availability of day light.
Install carbon dioxide sensors for monitoring the quality of fresh air when needed.
Try to consider maximum use of natural light.
Minimize HVAC system noise in the places where high sounds are emitted.
Use equipments such as tables, chairs and other furniture are that are ergonomically
approved and are designed for that use.
Design the equipments and furniture‟s that are reflective on health work practices for
eliminating repetitive motions and to prevent from sprains and strains.
Create „sense of place‟, which helps to create a unique character, purpose and sense of
pride, dedication for the personals and the work place community.
(Ed, Acker, 2011)
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CHAPTER 3
3. RESEARCH METHODOLOGY
This chapter aims to define the set of methods utilized throughout the research process. This
also includes the selection process of the methods and the case study subject.
3.1 INTRODUCTION
Research -
The practice done by an individual to solve the problem held by an individual or to
understand the terms of the answers for the questions held by another person with respect to
some specific object, individual or subject.
Research methodology chapter begins as the result of completion of the literature review
chapter. The definition of research clearly describes that the individual can respond to the
questions that are raised by him or by the other individuals. The basic reason raised from this
is the importance of the data to carry out the research. Since, data helps to carry out,
understand and prove the validity of the research in the future; the importance, dependability
and requirement of data further increases. Since remembering the data in mind is not reliable
source because it can be forgotten easily. So, keeping data in form of records, files and
backups plan for future use is useful in research work. There are certain methods to collect
the data for the research work.
Basically this chapter of research methodology consists of:
Describing about the data collection methods
Classifications of the data collection methods
Justifications certain methods for collecting data or use of strategy of collecting data
during research work.
3.2 RESEARCH PHILOSOPHY
“Research philosophy is the investigation of particular research opinion made by more than
one authors in their research work (Altinay and Paraskevas, 2008)”.
For the specific research, the collected data in the research work is used to study different
viewpoints that are held by one or more number of researchers. Research philosophy is
classified into three types, which are:
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Positivism philosophy
Interpretive philosophy
Phenomenology philosophy
3.2.1 POSITIVISM PHILOSOPHY
Positivism philosophy is the first philosophy of the research philosophy that can be used in
research work among the three classification of the research philosophy. Every individual has
its own unique thoughts; thus, in general different people have different thoughts and views
on different subjects. In this research philosophy, different thoughts in a research are
collected and examined and the result for the research is calculated (Bachman and Schutt,
2008).
The most important reason behind this research is to study the management process in
installation of warehouse in China, with consideration of case study of installation of DONJO
warehouse by STANDARD Company in different countries. Thus, the possibility to study the
warehouse installation can be different according to the studies done by different people. It is
not possible in this study which could be the reason not to use the positivism philosophy in
this research.
3.2.2 INTERPRETIVISM PHILOSOPHY
Interpretive Philosophy –
When the author views are considered and same views of the author are repeated in the
research work without trying any different approach in the research work, describes about
interpretive form of the research philosophy (Blaxter, 2006).
In other words, the data collected using the interpretive philosophy in the research work is not
calculated by using different approach required according to the need of the research work.
Hence, interpretive philosophy cannot be analyzed.
According to the interpretive philosophy, the secondary source describes that the
STANDARD Company have to consider without changing anything in it. As the in depth
study of the information is not supported by the interpretive philosophy, so this philosophy
also will not be considered to be efficient for the research work.
3.2.3 PHENOMENOLOGY PHILOSOPHY
Since the phenomenology philosophy is descriptive in nature, it totally supports the
investigation of core concept in the research work. Lived experience including realistic terms
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and hard facts is enabled in a phenomenology philosophy. Unreliable clarifications are not
considered in phenomenology (Altinay and Paraskevas, 2008).
The nature of the phenomenology philosophy is to express the process and it is useful to
study and understand the significance of warehouse management in the business.
The main reasons to use the phenomenology philosophy in this research will be:
The nature of STANDARD Company performance and trying to open warehouse in
China, in addition to the presence of warehouse management in India which is a case
study, and is a realistic study in this research.
Studying the warehouse management in STANDARD Company and its performance
of the analysis on the opening of warehouse in China will also be a descriptive study
of the philosophy.
3.3 RESEARCH APPROACH
Research approach is defined as the implementation or methodology or the advancement in
the performance of the research process. Research approach gives two ways to continue and
complete research:
Questions on the research process.
Research method suitable to the process.
Research approach is further characterized into two groups:
a. Inductive approach
b. Deductive approach
3.3.1 INDUCTIVE APPROACH
Inductive approach for the research work is associated with the observation of the extensive
generalization and theories. The inductive research approach involves observation, pattern,
hypothesis and theory (Schroeder, 2010).
The study about the STANDARD Company opening a warehouse in China is prioritized in
this report. Secondary source will also participate in making the observation and provide
information in this research work. The explanation of various environmental, economical and
political issues related to the construction and opening of warehouse in China are done by
development of the pattern, hypothesis and commencement of the research work, which will
be covered in this approach. Thus for this research, the inductive research approach will be
appropriate.
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3.3.2 DEDUCTIVE APPROACH
Deductive research approach is given additional general and particular study concentration. A
hypothesis, observation and confirmation process represents the deductive approach (Wilson,
2010). Deductive approach not only begins by creating or studying the theory, but also
through the observations which is required in the initiation of this research work.
After careful consideration and reading through the approach, it can be summarized that
deductive research approach is not suitable for this research work.
3.4 RESEARCH METHOD
For the research work two forms of data which is available can be collected:
Numerical data
Textual data
The basis for the determination of research method in a research work depends upon the type
of data collected i.e. either textual data or numerical data. Research method observes two
types of data classification methods:
1. Qualitative methods
2. Quantitative methods
3.4.1 QUALITATIVE METHOD
Textual data is collected in the qualitative method. Any data in textual form for example, data
dealing with the behaviour of humans as textual is collected as a qualitative method (Wimmer
and Dominick, 2006). In other words, effects on the individual due to wood protection
methods used in warehouse will be in form of text, thus the above information on human
behavioural can be collected in this research method.
This method will be required and necessary for this study. Such kind of information is
required for this particular study, since all the factors involved in the opening of the
warehouse will be required in this research. Different sectors like administrators of
STANDARD Company, governmental authorities of China, and the private sectors in China
that are associated with company can cause various amount of extra activities in the opening
of the warehouse in China. The influences on the STANDARD Company from the above
individual will determine an indirect effect on this research and on the opening of the
warehouse in China. By considering all the activities occurring above validate the use of
qualitative method for this particular research study.
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3.4.2 QUANTITATIVE METHOD
Quantitative method is used to collect data in a measurable or numerical form in this type of
research work (Kumar, 2005).
The research study will deal with the STANDARD industry and specifically focus on the
opening of the warehouse in China. There won‟t be much of the numerical relation or
calculation or information related in investigating the study or concluding the research in
effective manner. By considering the possibilities above, non necessity of quantitative
information is sensed in the study. So, quantitative method will not be used for this particular
research study.
3.5 DATA COLLECTION METHOD
Several sources can be used to collect the information for the research work. The data for
research work can be collected from the internet or from the newspapers. There are several
other similar resources from which data can be collected for the research work.
There are numerous ways available to collect the information for the research work (Stevens,
2005). So the way in which the information id collected for the research work can be
categorized into two types such as:
Primary data collection method
Secondary data collection method
However, the classifications of data collection methods are done on the basis of the source
from which the data is gathered by the individual in a research work.
3.5.1 PRIMARY DATA COLLECTION METHOD
Primary data collection method is the method in which the data is collected in a research
through direct involvement of an individual and participants in the research collecting the
information (Kurtz, 2009).
The time consumption in primary data collection method is more because the researching
individual is collecting the data from the participants directly. So, the accuracy of the data
gathered in this data collection method is more particularly in this type of research study. The
ways in which primary data could be collected in a research study in this data collection
method is through conducting interviews and surveys. Observations of the participants in the
research work can also be used to collect primary data in the research. The main source of
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primary data collection method can be the information gathered from the questionnaires that
is generated by performing surveys and interviews with the research participants. In other
words, questionnaire is the best way to collect information so, surveys and interviews will be
conducted with the research participants.
The ongoing investigation is the research work done on the opening of the warehouse in
China. Primary data collection methods will take more time in collecting data than the
secondary data collection method. STANDARD industry and people associated to the
company both in India and China will provide the research information and data. As
conducting an interview with the STANDARD industry officials to get the research
information is more time consuming, although personal contact is supported by the primary
data collection method. The problems that can be faced in researching about warehouse are:
Low and regulations in China, environmental conditions and official requirements in
opening of the warehouse.
Issue in identifying the actual industry officials to respond to the survey or to the
requirements in opening the warehouse in China.
Hence, primary data collections will not only be the fully dependent data, other sources are
also needed for verify the research study.
3.5.2 SECONDARY DATA COLLECTION METHOD
Other sources that are used to collect the information for research are newspapers, internet,
journals, articles, company websites and books. Secondary collection data method is the
technical term given to the method by which the data from the above sources are collected
(Hair, 2006). These sources of providing data and information for a research work are called
as secondary data collection source. The information already exists in secondary data
collection source form, so the accessibility of the information can be observed in these data
collection sources. Because of this reason, secondary data collection method does not take
much time to collect the information for research work (Kotler and Armstrong, 2010).
The ongoing investigation is the research work done on the opening of the warehouse in
China. Also, studying the methods used to protect the woods from getting damage by various
factors like transportation, pest, fire, atmosphere, weather etc. STANDARD industry officials
in India can help in gathering the data for the above research work, as the company has many
other overseas warehouses. Surveying and interviewing can also be used to gather the
research information. Surveys and interviewing can consume a lot of time in collecting
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information. It is also possible that other people of the company could help in filling up the
survey questionnaire.
The secondary data collection method is in which the available information is collected from
the secondary source and will enable the research person to gather information more quickly.
In this method the verification of the collected data by comparing the information of the
secondary data collection source from another secondary data collection source.
The phenomenology philosophy supports in the achievement of the reliable information in a
research work since it does not consider any kind of unreliable explanations. The possibility
and ability to cross check the information from the other secondary resources, verifies the
reliable and realistic nature of the information gathered during the research work. Because of
this reason, secondary data collection method can also be utilized in this research study.
3.6 DATA ANALYSIS METHODS
3.6.1 DESCRIPTIVE ANALYSIS
The basic plan to implement the descriptive method in a research work is to have a
knowledge concerning the present trend and the circumstances of the market. Each function
and factors are linked to the specific phenomenon and is considered by the descriptive
research (Kumar, 2005). The term in which already planned design is related to the
surrounding atmosphere helps in explaining some of the particular features of the specific
group and offers to have a well built argument linked to the perceptions made by the
consideration of the descriptive research. Surveys, observations, secondary data, diverse
views and panel discussions are some of the tools that can be useful in performing the
descriptive research analysis.
The research shows that, the STANDARD industry is trying to open a warehouse in China
which is a case study investigating the conditions and requirements required to open a
warehouse. Studying the present trend and market situation are the prime concern of the
market. This first opening of the warehouse in China will be the prime and hard investigation.
But, these investigations will also help to modify and to relate the applied theories and
practices in opening the warehouse for opening more warehouses if required. Because of
these reasons, the descriptive research will be useful for this research work.
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3.7 RELIABILITY AND VALIDITY
Observation if the steadiness in the evaluation is the reference of the dependability in the
research work. In other words, reliability of the research study or the test work is only
considered when the research work provides similar outputs in a regular manner (Briggs and
Coleman, 2007). The information achieved in the research work is trustworthy, can be
confirmed to be true only if same type of research work have similar outputs when they are
compared with the output of the present research work.
Secondary sources have provided the data for this research work. To gather the information
for this research work secondary data collection method is selected. The reliability of the data
which is collected from secondary sources using secondary data collection method can be
verified if same data is approved by more than one source. This is the only way to verify the
presence reliability present in the information in secondary research. Same technique is used
in this research study to verify the data. Numerous secondary sources are used to collect the
data for this research, which enables the achievement of the reliability in this research study.
The means to provide validity to the research work is by offering validity to the research
output with the help of several descriptive analyses used in the research. Initially presence of
long time validity must be confirmed to the provision of the validity in the research (Rubin
and Babbie, 2009).
The research work, examines the practice of different management practices in the
transporting the wood from India to China in easy and best way and also by considering the
case study of opening the warehouse in China for providing products to customers on time.
The use of the information, gathered from the trusted websites in this research work also
assists in enhancing the validity of this research.
3.8 STRENGTH AND LIMITATIONS OF THE RESEARCH
The experience bothering the standard industry is that it is trying to open warehouse by
studying the cases of warehouse opened in other countries. And the method that will help
them to know the reality in the experience is phenomenology philosophy. This method can
also help in increasing the descriptive knowledge of the warehouse. The approach that
initializes this research process will include the specific details like
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study of warehouse condition
law and regulations in China
effect of environment on wood
These are usually witnesses in inductive approach.
The use of another method called qualitative research method will help to understand the
human behavioural characteristics of standard industry authorities and the reasons that lead
the authorities allowed opening of the warehouse in China in certain method. The behaviour
of the authorities is the cause of the performance of warehouse in a particular way in China.
This type of data can only be gained by adopting the qualitative method in the research
analysis.
Secondary data collection method is the quickest way to gather the information in this
research work. Primary data collection method didn‟t allow the personal contact with
standard industry officials and collect the research information in a personal level from the
authorities.
3.9 SUMMARY
The basic aim of the research analysis is to study the Standard industry, and their effort in
installing and opening of the warehouse in China. The type of data collection method used in
classification is secondary data collection method among the two data collection methods.
And this method will be used in the research analysis to get the information for the research
work. However, on the basis of research approach the selection will be made for the data
collection method. Hence, the use of the research approach is justified in this research
analysis.
The manner in which data is collected and the research method which will state the type of
data that will be collected in this research possesses similar amount of importance.
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CHAPTER 4
4. DATA ANALYSIS
4.1 INTRODUCTION
This chapter give a brief idea what will be the specification of our warehouse and what legal
formalities we have to fulfil for building a new warehouse in China. As well as it is also
going to discuss how to manage the warehouse using different methods of warehouse
management? This chapter will also describe about the treatment we are going to use for
goods (wood); to prevent them from getting spoiled because of humidity or fungus. For
getting more practical point of view in this chapter an interview with manager of
STANDARD Company which has warehouse of similar products is also discussed in brief in
this chapter.
4.2 STANDARD Company Profile
STANDARD Company is warehousing Company. Company has around 10 warehouses in
India and 4 Warehouse in China. Company‟s China branch is new and has started their
business just 2 years ago in 2009. In India STANDARD Company is operating since last 10
years in southern part of India especially in Kerala, Tamil Nadu and Karnataka. Company
even has its 2 warehouses one in Himachal Pradesh and Madhya Pradesh. Madhya Pradesh
and Himachal Pradesh warehouses are basically warehouse for raw wood directly from
forests. These two are also base for sorting out woods and sending them to different branches
in India. And wood is even supplied to some local retailers. All other 8 warehouse have
storage of wood for specific purposes like furniture‟s and other art or luxurious goods.
STANDARD Company‟s Chinese branch is dealing with warehousing of costly wood for
artistic and luxurious goods.
Standard Company is not a very old firm but it has managed all the problems in two totally
different countries India and China, which have totally different traditions, working strategy,
and environment, legal formalities etc. very well and come as a successful firm in the field of
warehousing.
Now STANDARD Company‟s DONJO warehouse is a warehouse specially for storing wood
for guitars; these woods are imported from India, Pakistan, Nepal and even from some parts
within China and stored in the warehouse taking care of environmental conditions.
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All the raw wood is transported from all the three countries using a mixed transport system of
trains and roads. As China is not connected to any of these countries by the train route so 1st
by local transports these wood are transported to border and then after unloading and again
loading into local trains the wood are transported to the city railway warehouse from where
wood are transported using Trucks to the warehouse DONJO. This combined process is too
long and a lot of time is wasted in loading and unloading each time at the point of change of
transport. Besides this time loss the distance travelled is also too long and a lot of time is
spent in transport. Basic factors on which transport method is selected are as follows:-
How much big order is suppose to be transported?
If order is on regular basis like after 1 month then most chances are that order will be
big and transportation via trains would be preferred. On other hand if order is not too
big then road transportation may also be considered.
When we need the orders?
If Company have enough stock for now and it can wait for some time for next
delivery than any slow transportation system may also be considered like sea but in
case Company is running out of stock and need delivery as soon as possible then
faster method of transportation would be preferred.
How far is the supplier warehouse?
Company is also considering the distance between the suppliers location relative to
warehouse location.
Cost of transportation
Cost of transportation is most influencing factor while deciding the mode of
transportation as it will add up to the cost of product and may result into company‟s
failure in market.
Orders are given on regular bases like monthly or twice a month as the demand is not too
variable and orders are not given for a specific type off wood but as a whole mixed order for
all different types of wood. Like if one kind of wood is required then order cannot be placed
immediately and company wait till they are able to give a specific amount of order.
Purchasing is done keeping in mind that wood is being transported mainly via road transport
and longer the distance travelled costlier will be the product. Suppliers are selected on the
basis of their past record with Company and in market. Most of the suppliers are regular.
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During transport there are a lot of chances of wear tear of wood and a lot of damage may be
due to rain; so the wood are covered using a waterproof cloth. This cloth is tightly wrapped
around the wood so that high velocity winds do not displace the cloth.
Loading and unloading of wood are done manually each time. A lot of time is wasted in
border crossing operations and changing of transportation. Each time when the order arrives
it is inspected at the receiving point and after doing the specific colour coding is stored in
warehouse. Wood is sorted on the basis of following factors:-
- Humidity factor
- Damaging percentage
Humidity factor decides that how much processing is required before storing the wood. The
processing means is it necessary to dry the wood or not. Sometimes wood is dried using solar
heat only while sometimes other methods like smoking are also used.
Damaging percentage is deciding that wood is under acceptable range or not. And if
acceptable then does we need to cut wood to store it or it can be directly send for coding
process. Most of the damaged woods are sending to wastes to be used in smoking kind of
processes.
STANDARD Company is using colour coding to mark the wood. So that wood can
recognized by the seeing the colour. Different companies are using different coding systems
but all warehouses of STANDARD Company are using standard coding designed and this
coding is displayed on different places in each warehouse.
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Colour coding used by company is shown in table 1.
Sr. No. Wood Type Colour Code
1 Mahogany
2 Ash
3 Basswood
4 Maple
5 Agathis
6 Poplar
7 Zebrawood
8 Wenge
9 Padouk
10 Rosewood
11 Lacewood
12 Bubinga
13 Walnut
14 Spruce
15 Koa
16 Alder
Table 1 colour coding
Woods are stored in specific layout. Warehouse is further divided into individual sections
where different categories of products are stored. The warehouse has over 600 codes of
stored products, distributed into 4 individual sections. The study considers one of these
sections, where the number of codes is around 100. Coding is displayed using table 1 in brief
but it is only a simplified form of coding as it only differentiate the wood according to its
type but in storage different quality of woods are further coded and stored according to the
state of wood like it is of best quality without any damage, better rashes, no wastage if used,
dry, free from fungus etc.
The most frequent values for the size of the panels are 3.66×1.83m, and the thickness is
between 6cm and 25cm. Instead of using shelves, the products are piled one on top of the
other using small chocks between the packages. Great attention is paid to the alignment of the
items in each pile, to avoid sheet warping. Warping can easily occur due to the small
thickness of the packages and the large load they take.
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Figure 1 layout of STANARD Company.
The studied warehouse section consists of three parts: two of them have 12 front piles each
and the third part has 6 front piles (Figure 1). The piles are 7m high and the products are
stored in up to 4 depths of pile levels. The main aisle is used by the Clarks to gain access to
the front piles. The aisle is wide enough to allow the Clarks to remove the items of the front
piles and to retrieve items stored in the deeper levels. Each part of the section contains
different groups of products.
4.3 PROBLEMS IN STORAGE OF WOOD
Wood in warehouse is kept in controlled conditions so that it could be protected from the
various atmospheric effects and protect from getting damage from many other reasons.
Humidity and temperature in the warehouse are kept under controlled. Because these
can cause wetting of and wood and swelling of the wood. To deal with this company
uses traditional methods used in India. In the method woods are passed through the
coal smoke, which helps in soaking the water contents attached with the woods.
Chimney is installed on the top of warehouse so that waste flue gases can exit from
the warehouse. Chimney height is about 100 meters; so that waste gases and smoke
can easily escape to higher atmosphere.
Even some Fungicide Wood Preservative is used to control the fungus and wood
worms. Use of mixed chemical remedial treatments intended to control both insects
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and fungal decay is also normal. Many supposed woodworm infections were treated
with potentially highly toxic cocktails of solvents, fungicides and insecticides. Liquid
solutions of chemical treatments intended to control woodworm infection and decay
were generally applied by spray or brush application. Special masks are provided to
workers who are spraying these chemicals and national health and safety regulations
are considered while applying pesticides.
Fire is the major problem in the wood industry warehouses. The various methods used
to protect wood from other factors like coal smoke can cause fire in the warehouse. So
it is necessary to carry out the processes carefully. The fire extinguishers should be
installed in the warehouse and only experienced person should use the wood treatment
processes.
To protect the woods from the humidity, water, other atmospheric factors the wood
can be completely wrapped or laminated into a plastic wrapper. As plastic is non
biodegradable and water does not affecting it at all, so wood can be protected from
few factors easily and cheaply.
4.4 SUMMARY
Data analysis describes about the usage and verification of the data used in opening of the
warehouse in China. STANDARD Company‟s DONJO warehouse is a warehouse specially
for storing wood for guitars; these woods are imported from India, Pakistan, and Nepal and
even from some parts within China and stored in the warehouse taking care of environmental
conditions. Orders are given on regular bases like monthly or twice a month as the demand is
not too variable and orders are not given for a specific type off wood but as a whole mixed
order for all different types of wood. STANDARD Company is using colour coding to mark
the wood. So that wood can recognized by the seeing the colour.
Wood in warehouse is kept at controlled humidity and temperature for this purpose Company
is using traditional methods like smoking by coal and scrap wood. Chimney is implemented
on the top of warehouse so that waste flue gases can exit from the warehouse. Liquid
solutions of chemical treatments intended to control woodworm infection and decay were
generally applied by spray or brush application. Special masks are provided to workers who
are spraying these chemicals and national health and safety regulations are considered while
applying pesticides.
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CHAPTER 5
5. INTERVIEW QUESTIONS
Focusing areas for interview:-
- To find out about consequences faced while opening new warehouse in China.
- Purchasing strategy of STANDARD Company.
- Different methods of management implemented and success rate achieved.
- Transportation methods in use in Company and problem faced by Company in any of
the processes if any.
To find out more about the warehouse management and difficulties faced in introducing a
new warehouse in a new country like China, an interview was conducted of the CEO,
management staff and employees of STANDARD Company. Whole process of interview
take around 30-40 minutes and in this limited time some important questions were asked to
the authorities. A brief explanation of interview is explained as below:-
1. As an international warehouse corporation, do you find any difference in
opening warehouse in a new country like China as compare to India?
As explained by Plant Manager that although they were opening warehouse for same
products as they were already dealing in India still legal formalities in China are quite
different from India. In different countries legal formalities are different; even
environment is not same in both countries. So they have to face various legal and
environmental problems while they were in starting process.
2. What were basic problem (legal) faced while opening a warehouse in China?
Plant manager told that firstly any foreigner cannot open a warehouse on his name so
they have to find a local company named Lee Corporation who helped us to clear this
legal barrier. We want to open a warehouse near to market and transport circuit but
finding a big space for plant was also a big challenge. As all the prime location were
already occupied or under residential area so cannot be used for warehouse purpose.
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3. From where your most of wood is purchased and what are the considerations
while placing orders?
Purchase manager told that they are importing wood from India, Pakistan, Nepal,
Russia and many local parts of China. Orders are placed when they need a specific
amount of wood. They try to order with a great care taking into mind that next time
order cannot be placed for only single kind of wood variety; as it add the cost of
transportation. Although regular suppliers are preferred still new suppliers are
considered if good price and quality is offered by them.
4. What if a specific kind of wood is finished and you need it in urgent to complete
requirement of a customer?
According to purchase manager, in that particular case company use local suppliers
and even though cost is higher still they are preferred because ordering and supply of
wood from regular suppliers take a long time for delivery. Company‟s purchasing
department try to prepare order keeping in mind old market demand and predicted
analysis of market demand. Although exact prediction is not possible so some time
stock goes high for one kind of wood.
5. What are the treatments for wood once they are in warehouse?
According to one of the employee first logs are sorted out on the basis of their
condition like dryness factor and damaged goods. Then comes the processing where
first selected wood is dried using various methods and then colour coding is done
under the supervision of warehouse manager. After that wood is send to specific
location from where they belong.
6. What are the problems related to storing wood for long time?
According to employee woods are sometimes wet and that‟s why needed to get dried.
Smoking is done using scrap wood and this also result in keep temperature high in
warehouse to avoid moisture. But special care is taken in whole process as our
product is also wood and a little carelessness may result into fire hazards. Sometimes
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when wood are old there is sometimes chances of wood worms in logs; to avoid such
cases regularly pesticides are used in warehouse every month. During the time of
spray warehouse is kept close for 1-2 days as there may be chances of health hazards
due to poisonous air. Every staff member who works in this time wear masks
provided. And the wood which is already erupted by worms is sending to scrap.
7. What are the methods of transport used and how is order tracked?
According to purchase manager transport methods are trains and big truck Lorries and
he also mentioned that there is no specific method used for tracking the order. They
rely on past experience that how much time is taken in order delivery and if any
problem is faced truck drivers contact via phone. And small offices are opened at each
point of change of transport like near international border so that they can manage the
loading and unloading process.
8. What methods are used for loading and unloading and why?
According to purchase manager loading-unloading is done manually as labour is
cheap and easily available in China and nearby countries. Company has not given
priority to the use of cranes and other loading unloading methods as it will result into
high capital investment into the company structure and add burden on the accounts of
Company.
9. Why different methods of supply chain like JIT or benchmarking not used?
According to Plant manager JIT is not possible as we have to import material from far
places and transport methods are also not too reliable. And benchmarking was used
while stabling the warehouse with older warehouses of company and time to time
changes, suggested by headquarter is also considered and if appropriate implemented
in the plant.
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5. 1 OUTCOMES OF THE INTERVIEW
The interview concludes that:
1. Legal documentation must be carefully considered. As China has communist government,
sometime it is hard to work through law and regulations. So, legal documentation must be
carefully studied and completed before opening of the warehouse.
2. Environmental conditions must be studied before opening the warehouse. This must be
done so that the wood stored in it must be protected from the effects arises from the
environmental factor. This will also help in understanding the factors that have to be
controlled in the warehouse. Also distinguish necessary and unimportant factors in the
warehouse.
3. Health and safety factors are one of the important factors. The process done to protect
wood from various conditions includes the usage of harmful chemical and substances which
can cause serious damage to property and the life of an individual. So, health and safety
factors are installed in the warehouse and proper training will be provided the staff to use
them at the time of an emergency.
4. Transportation of wood is from India to China can be done through road and from sea. Sea
is good way in which woods can be totally closed in a container and is protected from
environment, but road transportation is the best selection because it is cheapest, easiest and
most commercial method to transport good from India to China. Since sea transportation
could take long time to reach the good also increases the capital investment. So, road
transportation is the best method to transport wood.
5. Stock amount also called as inventory and is also important thing to consider. As keeping
wrong stock can disappoint the customer and cause high investment of capital. Right amount
of stock will increase the sale and attract more customers.
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CHAPTER 6
6. DISCUSSION
As we can see from the interview of the authorities of STANDARD company that some of
the basics of warehousing industry are used by STANDARD firm and so we can also used in
our proposed warehouse but we also have to consider that there were a few point where
STANDARD is deviating from basics; so we have to reconsider those facts:-
Close down of plant for 1-2 days due to pesticides spray.
No specific study of local suppliers.
No proper tracking system for orders.
A lot of time and money wastage during loading and unloading at different points.
Unable to use JIT and other specific tools of management.
No proper method for sorting out the wood logs before storing.
Wastage of wood due to eating away of worms.
We can see that DONJO WAREHOUSE are keeping close their warehouse due to pesticides
spray for one day; in the world of high competitive world close down of warehouse may be
hazardous for business. Instead of this they may search for some alternative methods.
Even though they are importing their major stock from far away suppliers in other countries
still they should focus on local suppliers also. They should do supplier analysis and divide
them according to grading and further supplier relation tactics should use.
Orders are not tracked. There may be any problem in travelling and an exact estimation is not
possible without tracking. There are also chances of theft during transportation.
Even though labour is cheap, manual operations waste a lot of money and time in the process
of loading/unloading. Transportation is done using old traditional ways. No permanent
solution is found out.
JIT is totally ignored and no use of lean is implemented in warehouse.
Sorting process is done on experience bases of the person responsible. There are a lot of
chances of manual error and miss-arrangement of goods.
No account is taken of wastage due to humidity or worms eating away. A proper account
should be taken and if in a proper type of wood or wood from a particular supplier has more
M99EKM DISSERTATION-MSc SUPPLY CHAIN MANAGEMENT Page 46
problem then others; it should be taken into account next time selecting suppliers and grading
them.
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CHAPTER 7
7. CONCLUSION
The main part of the research study is to define the problem, find the solution and method and
describe the ways to execute the solution. It also includes the explanation of the data
collection techniques and ways to collect information. Generally research finding are
considered too time consuming and hectic, while the selection and application of research
processes are considered to be exciting and efficient. The success behind the good answers
and conclusions is achieved through careful selection of the process from the most
appropriate set of research methods.
The beginning of the research method is done by defining the research topic and describing
the importance of keywords, key concepts and those helping to complete the research topic
consecutively determining the relevant literature for the research work. After defining and
understanding these literatures, the existing facts and information in the related field will be
determined from different aspects. After this, the next stage describes the methods used and
clarifies the conceptual definitions by determining the methods and ultimately applying them
to prove the appropriate definitions.
7.1 OBJECTIVES OF THE RESEARCH
To analyze the political issues and formalities.
This objective is about the governmental formalities and political issues in the opening of the
warehouse in China. The study, research and analysis of every factor covered in this
dissertation verify that the warehouse has covered all the formalities and requirements, and
can be open safely in China.
Hence, this objective has been covered and achieved.
Critically reviewing the preventive methods to treat wood from damages.
Damage of the woods depends on the various factors. Many of the factors are mention in the
data analysis chapter and almost all are covered in future recommendation chapter. From
future recommendation chapter, wood problems can be studied and removed effectively from
the warehouse.
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Hence, it can be concluded that the objective has been achieved.
To understand designing of a well-structured warehouse suitable for the wood
products.
A well designed structure of the warehouse includes various management tools like lean and
quality management to make it much more effective and efficient to use. This warehouse
design in the dissertation has management tools so that it should operate effectively but time
to time changes are required for increasing the efficiency of the warehouse.
Hence it can be said that this objective is achieved for current time but in future there
will be some modifications to increase the efficiency.
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CHAPTER 8
8.0 RECOMMENDATION
On the basis of our finding from literature review and case study of STANDARD Company
we recommend that suppliers should be graded on their performance bases; both permanent
and emergency suppliers should be studied. Local suppliers can be developed by helping
them and sharing information with selected suppliers.
As wood is one of the oldest and most flexible materials available. The best ways to protect
and preserve the wood from various factors are:
1. Dry Rot
a. Apply Ecobor II Gel to end grains and any susceptible surfaces
b. Apply Borotreat 10P, dissolved in water, by spray to timber and masonry
2. Wet Rot
a. Apply Ecobor II Gel to end grains and any susceptible surfaces
b. Apply Boracol B40/1 Paste and Boron Rods to timbers in contact or embedded in
masonry.
3. Woodworm
a. Mild damage - treat with Borotreat 10P dissolved in water
b. Moderate damage - de-frass & treat as above, and with Ecobor II Gel
c. Severe damage - cut out damaged section, repairs and treat with Borotreat 10P,
Ecobor II Gel and insert Boron Rods.
4. Fire Protection
a. Fire Retardant Wood Coatings - S92 water borne fire retardant coating systems are
available for interior and exterior use.
b. Fire Retardant / intumescing wood coatings - S42 fire retardant and intumescing
coating systems offer protection of floors (upgrading joists and boards to 30 minutes),
decorative panelling and ceiling board.
c. Protective measurements will be taken to protect them from the fire during smoking
process done during protecting woods from air moisture and termites.
5. Weather Protection
Natural finishes will protect the wood from such disfigurements and are used where
the principal reason is the appearance of the exterior timber. All types of natural
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finishes are less durable than opaque coatings so maintenance intervals will be
shorter.
6. Conveyor belts can be used to transport wood logs from one point to other in a warehouse
which would be quick and safe. Less maintenance of the conveyor belts also add to the
feature that the overall capital investment can be reduced.
7. As mentioned above proper colour coding or indications must be used for differentiating
different types or size of the wood.
8. Pallets can be used to raise the wood from the ground to protect it from the ground
moisture also the pallets can be painted differently for the distinguishing the wood part.
9. Lean management methodology can be used to organize the wood in the warehouse so that
the space of the warehouse could be used efficiently. Also this will increase the stock
placement in the warehouse.
10. Containers as in sea transportation can be used, to transport wood from India to China.
This is because firstly track of the material can be kept, secondly it is safest way and
thirdly most important the woods can be protected from the environmental conditions
while transporting from sea rather than through road transportation.
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