Stores & Warehouse Operations and MGMT

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1. Stores & Warehouse Organisation
1.1 The Purposes and Functions of the Stores/Warehouse
1.2 Stores & Warehouse Construction
1.2.1 The Building
1.2.2 Large-Scale Equipment
1.2.3 Floors and Floor Flatness
1.2.4 The Loading Bay
1.2.5 Other Important Areas
Doors
Lighting
Picking Areas
Special Storage Areas
Ancilliary Service Areas
1.2.6 Gathering Data
Pallet space
Pick popularity
Volume movement
Pick density
1.2.7 Changes in Modern Stores Design
http://www.gmcs.co.uk/stores.htm 08-Jul-2008
1.3 Storage Options
1.3.1 Shelves and Bins
1.3.2 Racking (Non-Pallet)
1.3.3 Pallet Racking (Various)
1.4 Allocating Storage to Stock
Characteristics and appropriateness of racking systems
1.5 Allocating Stock to Storage (Pick Density and 'The Golden Zone')
1.6 Material Flow Planning (Layout)
The Use of Simulation in Material Flow Planning
1.7 The Installation of Automation
1.8 Coding and the Stores 'Vocabulary'
1.9 Installing Technology
1.9.1 Batch v. On-Line
Batch
On-Line
1.9.2 Data Recording Equipment
1.9.3 Voice Directed Picking (but see 4.2.7 below)
1.9.4 Data Communications
1.9.5 Weighing and Measuring Devices
Weigh counting
1.9.6 Bar Coding & RFID Tags
Bar Coding
RFID Tags
1.10 Special Situations
1.10.1 Stockyards
Construction
Repairs and Maintenance
Layout and Organisation
1.10.2 Cold Stores
1.10.3 Tools Stores
2. Materials & Material Handling
2.1 Knowledge and Protection of Materials (including FIFO)
2.2 Pallets and Unit Loads
2.2.1 The Pallet
2.2.2 The Unit Load
2.2.3 Pallet Loss
2.2.4 Pallet Stacking
2.3 Packaging
2.3.1 The Package
2.3.2 Packaging Waste
PRN (package recovery note)
WEEE regulations
2.4 Materials Handling
2.4.1 Introduction
2.4.2 Equipment for Seizing and Lifting
2.4.3 Hand Operated Equipment
2.4.4 Power Driven Equipment
2.4.5 Cranes
2.4.6 Order Pickers
2.4.7 Powered Conveyors
(For carousels, see 4.2.6)
2.4.8 AGVs
2.4.9 Training and the 5 Rules
2.4.10 Avoidance of Double Handling
2.5 Transport and Despatch
2.5.1 Regulations and Safety
2.5.2 Road
2.5.3 Rail
2.5.4 Ship
2.5.5 Air
2.5.6 Arranging Transport - The Freight Forwarding Agent
2.5.7 Route Planning Software
3. Stores and Warehouse Operations
3.1 The Carriage of Goods (The INCOTERMS)
3.2 The Transfer of Goods and the Law
3.3 The Principal Steps and Official Notes in Ordering and Receipt
3.4 Quality and the Receipt of Goods
3.4.1 Introduction
3.4.2 The Main Decision on Incoming Quality (The Breakeven Point)
3.4.3 The Inspection of Incoming Parts by the Stores
3.4.4 The Sampling of Incoming Parts
Sampling plans explained
Single Sampling
Double Sampling
3.5 The Issue and Despatch of Material
3.5.1 Stores Issues within the Factory
Procedures for stores issues
3.5.2 Despatches outside the Factory
3.5.3 Load Assembly within the Factory
4. Special Topics
4.1 Variable (Random) v. Fixed Locations
The Magic Number Method
Requirements of a 'Putaway' Software system
4.2 Order Picking
4.2.1 Cost and Picking Performance
4.2.2 Reducing Travelling Time in Picking
4.2.3 One-Step Picking
Picking Multi-Line Orders
Zonal (or Sectional Picking)
Dynamic Zoning
4.2.4 Two-Step Order Picking
4.2.5 Technology I - Picker to Stock
4.2.6 Technology II - Stock to Picker
Horizontal and vertical carousels
4.2.7 Voice Directed Picking
4.3 The Maintenance of Stock Records
4.3.1 How the Stock Records System Works
4.3.2 What is meant by 'Records Accuracy'
4.3.3 Improving the System
Causes of Error in Stock Records Recording
4.3.4 Controlled Stores Accuracy
4.4 Cycle Counting (including off-site link to Stock Accuracy Course)
4.5 The Financial Control of Stock
4.5.1 The Custodianship of Assets
4.5.2 Financial Reporting
4.5.3 Managing Stock Losses
4.6 Transaction, or 'Audit' Trails
4.6.1 Defining a Transaction Trail
4.6.2 The Reconciliation of a Stock Count
5. Human Resources
5.1 Recruitment and Selection
5.1.1 Staff Recruitment
5.1.2 Staff Selection
5.1.3 The Job Offer
5.2 Industrial Relations in the Stores/Warehouse
5.2.1 Grievances
5.2.2 Breach of Contract
5.2.3 Discipline
5.3 Fire Precautions
5.4 Security
Internal Theft
5.5 Pests in Stores and Warehouses
5.6 Health and Safety in the Stores
5.6.1 Personal Responsibility
5.6.2 Criminal Liability
5.6.3 Civil Liability
5.7 Reviewing the Stores Performance
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1. Stores and Warehouse Organisation

1.1 The Purposes of the Stores / Warehouse
The stores is self-evidently a major company service department. Service is provided on behalf of the
following functions:
Service to Purchasing & Quality:
The stores receives raw materials and bought-out parts on behalf of Purchasing. The receipts
must therefore be counted accurately and the material checked or sampled as to quality.
Information about receipts must be promptly notified to the central database.
Service to Production:
The stores must marshal and issue all works orders on behalf of production, and perhaps any
tools and fittings needed. The stores also accepts material from production, whether completed
work or scrap. The nature of production is such that emergency issues of material are always
likely to be required. It would follow from this for a factory stores that the facility should provide
a service during all times that production takes place ... including second and third shifts.
Service to Production Planning:
The planning of production and the correct maintenance of stocks are essential services as the
company progresses manufacture, but these tasks simply cannot sensibly proceed unless the
stores/warehouse correctly maintain stock records at a very high level of accuracy.
Service to Distribution (Logistics):
The stores or warehouse must prepare goods for despatch to external customers within a
turnaround time that has been agreed between its manager, the distribution manager and
transport supervision. The function of despatch includes packaging and, perhaps, making ready
all documentation.
Service to Field Service or Engineering:
There may be a requirement to hold and dispense spares for machines both within the factory or
installed at customers' premises on a 24-hour basis. The stores' role in providing this service
entails call-outs ... not merely leaving a key with security.
Service to Finance (and Senior Management):
Stock is regarded for financial purposes as a current asset of the company - ie an asset of the same
nature as cash and debtors - so that consequently Stores' maintenance of accurate records is a
vital contribution to company management. The accuracy of the records is not merely an issue at
year end when the balance sheet is being struck. On going accuracy is needed continually for
integrated financial accounting purposes.
Other important functions of the stores relate simply to the internal good management of the facility. Obvious
examples are the safe and economical handling of material; and security from fire and theft. As well, there is
a requirement to maintain stock in good condition. (It is rarely accepted, however, that the stores or
warehouse is responsible for the ordering, forecasting or replenishment of stock itself, except perhaps
inexpensive consumable items or fuel in the course of operating a simple "2-bin replenishment" system . We
must return to the question of purpose and function in the final Section of this on-line course, when the
matter is discussed as to how well the stores has performed and the need for its continuous improvement.
Also visit the website of The UK Warehousing Association.
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1.2 Stores & Warehouse Construction
1.2.1 The Building
A single storey building is almost always to be preferred - it is cheaper to construct

and it is cheaper to fit out with ancillary services. Above all, a single storey is more
suitable for fork lift trucks which, in a multi-level facility, would otherwise need
sometimes to go from level to level via lifts. Although single storey buildings are
nowadays the norm, there are two ways in which some of the advantages of a two
storey building can be obtained. The first is by the construction within the warehouse
of a mezzanine floor for offices and limited specialised sub-stores. The second is to
have multi-tiered binning. This consists of stacking one run of shelving, say 3m high,
on another that is also 3m high. A floor is then provided for storesmen at the higher
3m level. It should be noted, however, that a disadvantage with both mezzanines and
multi-tiering is the exclusion of natural light at the lower levels. This forces up
operating costs due to the need for artificial lighting, and may lead to accidents.
(Inadequate lighting is a major cause of accidents generally.) Of course, if the new
stores needs to be in the centre of a major city, land prices may force the company to
develop a multi-storey facility.
Multi-storey warehouses can be successful if care is taken to 'zone' the stored material
carefully. Typical zoning schemes are: (i) high and low pick densities (see later); and
(ii) bulk stock / back-up stock / picking stock. A financial reason for single-storey is
given in the relationship between the cost of the construction, worked out in £ per
cubic metre of space obtained, and the (single storey) height to the eaves. This can be
illustrated by a graph showing how the relative cost per cubic metre of space created
falls exponentially as the overall height of a building rises. As a rough estimate, a 12
metre high building would cost only 15% more than a 6 metre building. However, a 12
metre (tall) warehouse would show major cost savings over a 6 metre (more extensive)
warehouse of the same racking capacity, with savings in land costs, rates, heating etc..
Perhaps as important as this is the resale value of the warehouse, as more and more
companies are looking for new premises and focus on buildings well over 6 m high.
1.2.2 Large Scale Equipment
A two-stage approach can be used to work out the best system of materials handling.
First, the best or most likely range of units loads of incoming materials is determined:
size, weight, frequency etc.. This will enable the equipment to be decided that is
necessary to handle them, and the design of the receiving docks. Secondly, the unit
loads required by the company's own customers are considered, so that the equipment
needed at this end of the materials handling system can be determined. (For example,
consider the requirements to fit out a supermarket ... receiving docks and fork lift
trucks are necessary to deal with incoming cartons brought in from the retailer's
depot, and wire trolleys and trolley parks are needed to deal with the carrying away of
customers' weekly groceries to their cars.)
1.2.3 Flooring and Floor Flatness
Floors are always of concrete, sometimes treated with compounds to reduce slippage
and to minimise dust and grit. Specialist contractors must be employed to lay them,
capable of constructing them to the required high standards of flatness and delivering
the required degree of durability.
Flatness is especially important: if a floor is not flat, fork lift trucks will slow down
and may collide with racking. But what is flat? To answer, consider an elevation
difference of 10mm across a 1500mm aisle. Put a narrow aisle truck on the floor at
this level and raise its cab 15m. Now the 10mm difference has become a 100mm static
lean. At speed, that 100mm lean becomes a lean of 300mm. Floor flatness is specified
by BS8204 (Part 2). Floors should have an elevation difference of less than 3mm.
Flatness is measured by a prophilograph machine, which traces the floor contours
electronically. An uneven floor can be flattened by a laser-guided grinding machine,
or, alternatively, a new floor can be laid as an apron on the old one.
1.2.4 The Loading Bay
Loading bays are positioned so that vehicles can have direct, unhindered access to
them without the need for complicated manoeuvring. Among other things, easy access
will speed the loading and unloading processes and may even reduce the need for
extra bays. A key decision is whether to allow for side loading or end loading of
vehicles. End loading offers many advantages. Although it restricts access to only one
part of the load, the narrower width is such that than one can get two bays in a space,
compared to one with side loading. End loading also provides better temperature
control and greater safety. (Loading bays are a particularly critical area for safety ...
25% of all industrial accidents occur in this area). Note incidentally, that clockwise
circulation of traffic up to the loading bays is required to provide better driver control
of the reversing turn into the bay. The construction of the loading bay must clearly
allow for modern materials handling equipment and practices. Doors should be 9 ft,
or a little more for higher trailers. The height of the loading bay platform must
accommodate any number of vehicle types and make allowance for the fact that
vehicle heights rise and fall during the loading and unloading processes. The usual
(very cost effective) solution nowadays is to build permanent docks levellers. As for
location, two common practices are diametrically opposed to each other. One is to
locate both the receiving and despatch bays next to each other. The other is to put
them as far apart as possible! However, with modern communications and materials
handling, it may be more effective to place bays at several points around the building
to allow direct pick-up and easy despatch by factory departments. If this is done, of
course, all such bays must be centrally controlled and berth activity supervised. The
question of how many loading/unloading bays should be provided in the construction
of the stores or warehouse can be decided best through the use of a simulation model
as described below.
1.2.5 Other Important Areas
Further vital topics which must be dealt with include those in the list below. Perhaps
the most important point, however, is that the stores should be designed, at least in
rough, by stores staff themselves - it will be realised that an inadequately planned
facility can have massive, permanent on-going effects on operational costs. For
example, failure to obtain the know-how and inside knowledge of staff may result
later in queues; excessive waiting times for drivers or shop floor operators; double
handling; and delays in clearing materials for use.
(a) Doors
For the sakes of security and to minimise heating costs, instal only those doors which
are essential. Aspects of doors to consider are from (1) to (5) as follows - or perhaps a
combinations of them is required ... (1) their speed (speed is clearly important for
doors to cold areas); (2) whether automatic control is desirable; (3) security; (4)
thermal efficiency: (5) whether specialist factors apply, such as use as fire shutters,
extra high security or heavy duty. How much traffic will use the door and what types
of traffic will it be? Alternative door types are (i) sectional insulated overhead doors
('up and over' doors, or Thermadoors), which may be standard, or normal, lift, high
lift or low lift, (ii) Rapid Roll doors. An essential accompaniment to internal doors is
either a traffic light or one-way system. (Warning klaxons are an additional
safeguard.) Door control activators should also be given attention - it is grossly
inefficient if drivers of FLTs need to dismount to open/close the door. The necessity
for high speed, insulated doors is dealt with under Cold Stores.
(b) Lighting
Ensure that the fullest possible advantage is taken of natural light, especially in
gangways and passages, so make sure shelves and racks when they are installed will
not obscure windows. (Windows of continuous glazing with wired glass.) Inadequate
lighting can make it difficult to read documents, labels and screens. Anto-glare filters
should also be considered. (On the matter of clarity of documents, ensure that bold,
clear fonts are used and that the pitch of letters and numbers is sufficiently large.)
(c) Picking Areas
Dealt with below.
(d) Special Storage Areas.
Heavy goods, bins, safes and others may be zoned into special stores areas to be laid
out in conjunction with the main pallet racking.
(e) Ancillary Services Areas.
These are: the boiler house; electricity sub-station; garage; fuel pumps; canteens;
toilets; car parks; first aid stations, etc..
1.2.6 Gathering Data
(A) Calculating Pallet Space
The following simple six step procedure can be used to find the average palletised area
that will be occupied by a case or package.
i. If the cases are to be stacked on a pallet, find the number of

cases per tier on each pallet and the number of tiers per pallet.
For example, 5 cases per tier and 4 tiers per pallet = 20 cases
per pallet.
ii. Decide the maximum number of pallets per stack. For

example, with 3 pallets per stack, the number of cases is 20 × 3
= 60.
iii. Each stack occupies the area of one pallet, plus, say, 1.5 cms
overhang on each side. The area is thus 1030 mm × 1230 mm,
= 103 cm × 123 cm = 12,670 sq cm, or 1.267 sq metres per
stack.
iv. The gross area in iii. is reduced to 60% net after allowing
for aisles, staging areas and offices. Thus net area is 1.267 / .6
= 2.11 sq metres per stack.
v. We must now allow 20% wasted space for honeycombing, so

that the actual space per stack is 2.11 / .8 = 2.64 square metres.
vi. The area per case for planning purposes is therefore 2.64 /
60 square metres per case, = 0.044 square metres per case.
(For example, if stacking 2,000 cases, allow 2000 × 0.044
square metres = 88 square metres.)
(B) Calculating Pick Popularity (P)
Analyse existing data such as the stock records transaction trail and record the total
number of picks plus putaways per item per month. If the file holding this data is
sorted into descending order of the number of picks + putaways, it will be found that
the top 20% of the items account for 80% of the total number of picks + putaways ...
the familiar ABC effect.
(C) Calculating Volume Movement (V).
From the data in (B), apply the volume of each item V. This is defined as V = T × C,
where T = the average total number of units of the item put away and withdrawn per
month and C = physical volume of each unit - ie the space occupied by one item,
measured in cubic centimetres (or cubic feet). That is, volume movement is the volume
of each item stored and picked per month. Analysis of items in descending order of
volume movement will show typically that 15% of items account for some 80% of the
total volume movement. Of equal interest to the stores planner is the fact that 50% of
the items account for less than 0.5% of the total volume movement.
(D) Calculating Pick Density (D)
If P = the average number of putaways and withdrawals per month for an item, and V
is its volume movement, then each item's pick density D = P / V. Pick density is needed
in determining storage location, as explained further below. Hint: In order to find the
volume of a small item, institute a "measuring cup" of fixed volume ( say 100 cc) and
determine how many units will fit in a cup. For large items, imagine them being in a
box, and apply a tape measure to the imaginary box.
1.2.7 Changes in Modern Stores Design
The stores designer today must be very conscious of the rapidity of change taking
place in the tempo of modern manufacturing. With Just-in-Time supplier receipts,

kanban and JIT deliveries, the quantities of stock ordered from suppliers,
manufacturing lot sizes and the delivery quantities demanded by customers are
becoming progressively smaller and their frequency of movement correspondingly
greater. So while in the past the emphasis in design was on economy of storage
density, todays emphasis is on speed and flexibility. Issues today are traffic jams and
the quick attention to incoming goods and shop floor receipts.
1.3 Storage Options
Storage options here means the stores or warehouse 'furniture' - the physical containers, shelving and the rest
used to contain the items being stored. Note that the term stores furniture seems to imply that the fixtures and
fittings are static and the goods within them are at rest. It is possible, however to install what is termed 'live'
storage facilities. With live storage, either the goods themselves move, or the equipment moves, or both. An
example of live storage where the goods alone move is a chute.
1.3.1 Shelves and Bins
Open shelving is suitable for items within strong packages, such as small boxes of
components. A working ledge at the front is typically provided for counting out items
being picked. Closed shelving usually means closed at the back and is more common.
It is suitable for non-packaged goods and can be fitted with shelf trays. Lockable
fronts may be provided. A shelving bay means a single multi-shelf construction ... ie
one unit of shelving from the equipment supplier. By bolting several bays together
side-by-side, we form a 'run'. A very strong, stable structure is formed when two runs
are bolted together back to back, and, as indicated above, runs can also be stacked in
tiers. Guidelines on shelving are contained in BS826, specifying preferred dimensions.
1.3.2 Racking (Non-Pallet)
The term "racking" is applied to any storage fixture that is not shelving or binning.
Racking is used for the storage of an enormous variety of goods - pallets themselves,
tyres, cables, bars, tubes, drums ... The layout of racking must be given the greatest
attention at the design stage, since the decisions made will have a considerable effect
on the utilisation of floor space (and volume) and on the speed and efficiency of
storing and picking.
A common requirement in industrial stores is for racking for bars and tubes. The
basic options are to hold the stock either horizontally or vertically. The preference is
usually for horizontal racking. This may be either pigeon hole or antler ('horn').
Pigeon hole racking consists of angle irons in which the bars are stored together. A
disadvantage of it is that mechanical handling is difficult. With the antler method, the
racking consists of a framework of angle irons, so that each bar is stored in an
individual slot like bottles in a wine rack, making mechanical handling easy.
Horizontal racking clearly demands corresponding horizontal working space, and if
this is limited compared to height, vertical racking may be preferred. Two problems
with this are (1) that the bar or tubing may become distorted due to the pressure of its
own weight; and (2) the greater safety hazard it presents.
Note that warehouse racking is regulated under the Construction (Design and
Management) Regulations ('CDM'), part of the Health & Safety at Work Act. The
CDM regulations were amended and re-issued in April 2007. Although racking in a
warehouse may seem a long way from a building site, the Health & Safety Executive
classifies the installation of racking as a construction project. To comply with the

CDM regulations, companies must ensure that a health and safety plan has been
developed before any construction work begins. A health and safety file that is
available for inspection at any given time must also be produced. The preparation of
the plan is the responsibility of the warehouse manager. It will usually begin with a
description of the 'project' and a general statement of health and safety principles and
objectives of the work. It will include arrangements for managing and organising the
project, and include the identity of those responsible for the actual erection.
1.3.3 Pallet Racking
There are a great many standard storage arrangements for pallet racking. The Stores
planner can decide on the configuration suitable for a specific need simply by
contemplating a standard layout, the type of material to be stored and the
picking/putting away rates to be achieved. Seven standard arrangements are given
below, with very brief comments on each. Their pro's and con's are summarised
below.
(i) Block Stacking
Unit loads are stacked on top of each other, and stored on the floor in storage lanes
("blocks"), two to ten deep. Block stacking is suitable only for a very limited number
of different items, where product quantities are large and/or where products
themselves are bulky and turnover is high. Very high storage density is achieved
though ease of access is not good. Also note that block stacking is strictly LIFO (see
below), so that if FIFO is necessary, block stacking is not a feasible option.
(ii) Single and Double Deep Pallet Racking
Single deep racking is a simple system that is associated with pallet racking for
picking faces (see Two-Step Picking later). It allows immediate access to every load
stored. A major disadvantage, however, is the loss of some 60% of floor space to aisles.
Double deep pallet racking is merely an extension of single with less loss of space to
aisles (but with more honeycombing).
(iii) Drive In and Drive Thru Racking
The racking consists of upright columns with horizontal rails to support pallets.
Storage lanes of the chosen depth reduce space lost to aisles even more. High density,
but suitable only for low/ medium thruput items. LIFO only. Drive thru merely means
access from two sides.
(iv) Pallet Flow Racking
This superior though expensive system is similar to Drive In Racking, except that
loads are moved on skate wheel conveyors. As a load is removed from the front of the
storage lane, the next lane advances to the picking face. Pallet flow racking gives high
throughput and good space utilisation, and permits FIFO. It is used for high density,
high thruput storage, but costs some £200 per storage position.
(v) Push-Back Racks
As a load is placed in storage, its weight and the force of the FLT (fork lift truck)
pushes back the other loads in the lane. As a load is removed, the rear loads push
forward. Expensive and LIFO.
(vi) Mobile Pallet Racks
Whole rows of rack are moved forward together, eliminating aisles.
Safety is a most important concern with all racking. Training must be given by the
equipment manufacturer and the greatest care exercised to ensure loads are evenly
distributed and that they never exceed the manufacturer's limits. Operating conditions
must also be satisfactory, such as lighting and working space, and the racking
installation must be rigorously inspected on a regular basis, not simply when someone
'notices something is wrong'... For Racking Safety Trainining, visit SESS.
1.4 Allocating Storage to Stock
The first task is to obtain and analyse the volume movement of all items so that the correct storage capacity
can duly be assigned to the items to be stored. The four principles which the planner will typically follow are:
1. Low volume movement; high popularity:
These items should be assigned to very productive, low volume storage media - for
example, carousels (see below).
2. Low volume movement; low popularity:
Expensive storage media cannot be justified for these items. The media selected for
them will be storage drawers and bin shelving.
3. High volume movement; high popularity:
These items must be stored in pallet racking systems that lend themselves to frequent
picking and restocking, such as flow racks and single deep racking.
4. High volume movement; low popularity:
Other, less expensive styles of racking will typically be chosen.
Consideration should be given to the relative merits of the seven types of pallet racking described in the
previous sub-session. The characteristics and appropriateness of the seven systems are summarised in the
following table.
Characteristics and Appropriateness of Racking Systems
....................................Cost .Storage Density .Load Access .Thruput Capacity .FIFO? Variabl Load Sizes?
Block Storage ........................n/a..............v.good............................poor ............................average...................y.............................good
Stacking Frames....................low..............good...............................poor.................................poor.....................n.............................poor
Sing/Dou Deep ......................low..............good..........................good/OK.........................good/OK................poor......................average
Drive In/Thru ........................ low...............good.............................good...............................average..............difficult......................poor
Flow Racks..............................high..............good............................good.................................v.good..................yes............................poor
Push Bk...................................high...............good.............................v.good...........................average..............difficult...................average
Mobile.......................................high..............v.good............................poor................................v.poor...................no.........................average
As we see from the table, both relative volume movement and relative picking popularity are taken into
account in working out required storage volume and determining the specific storage media to be installed.
Relative volume movement and relative popularity are consequently taken into account in determining where
"regions" of stock and storage media are to be located. In short, where both volume movement and
popularity are high, flow racking might be best. Where volume movement is low, then we might turn to (1)
storage draws (low popularity); (2) bins and shelves (medium popularity); and (3) carousels (high popularity).
1.5 Allocating Stock to Storage (Pick Density and 'Golden Zone')
For a very small number of special items, the decision as to which locations they are to be assigned for storage
will be made on an individual basis. For example, precious metals will be located in safes and material likely
to give off fumes will be located in well ventilated areas. The decisions for the great majority of items within a
general storage region, however, will be made after first considering how easy (quick) it is to put away into, or
pick from, those locations. In stores jargon, the locations where these activities may most easily be
accomplished are referred to as "the golden zone" - locations which are between waist and shoulder high, and
are close to a central point in the stores. Next come locations in the "the silver zone". Finally, the slowest and
most distant locations make up "the bronze zone". Nominating locations and zones is the first task in deciding
what to put where.
At first thought, it seems intuitive that the criterion for deciding which items are to be assigned to the golden
zone should be on the basis of their popularity. However, popularity alone ignores the fact that the stores
planner is trying to optimise the use of the golden zone, and that consequently he should also take into
account how much space is taken up by items. What he wishes to do is to maximise the degree of picking that
takes place there. Consequently, the notion of pick density, previously defined, must be examined further.
As previously stated, if P = the average number of putaways and withdrawals per month for an item (ie
popularity) , and V is its volume movement, then each item's pick density D = P / V.
The planner must calculate the pick density of each item within a stores region and allocate the group of items
with the highest pick densities to the golden zone, the group with next highest pick densities to the silver zone
and those with the lowest densities to the bronze zone.
To illustrate the optimisation of golden zone space, consider a simple example of a golden zone of just 10
cubic meters of space. Now consider three items A, B and C, with the attributes shown in the table below.
...............................Item ....................Popularity P ................Volume-Movement V (T × C) ..........Pick Density D (P / V)
................................A .....................200 per month ......................10 m3 per month .................................20 requests/m3
................................B .....................150 per month .......................6 m3 per month ..................................25 request/m3
................................C ......................120 per month .......................4 m3 per month .................................30 requests/m3
Suppose now that we decide to store one months supply of material in the golden zone. If we were to allocate
Item A to the zone on the basis of highest popularity, this will exhaust the capacity of the zone and the
number of visits we will get to it will be 200. If , however, we use the basis of pick density, the items assigned
to the golden zone will be C and then B. Together, these will exhaust the zone's capacity of 10 m3 (ie 6 + 4 =
10) and the number of visits we will get will be 270 (150 + 120). The use of pick density instead of popularity
in allocating items will make a significant difference to the stores' utilisation of prime space.
1.6 Material Flow Planning (Layout)
The dominant scheme for the layout of the facility is as a U-shaped flow. The advantages of a U-flow are as
follows:
* There is very good utilisation of dock resources (doors, dock levellers, space, goods
in/out staff), since receiving and despatch operations can share docks;
* U-flow makes cross docking easier, and also facilitates the immediate onward
movement of incoming Just-in-Time supplies to the factory floor;
* U-flow gives excellent FLT utilisation, since putaway and picking trips can be
combined;
* There is good security;
* U-flow design is inherently more flexible - it is easier to expand the various facility
areas as operations change.
Other layout schemes are "Straight Through" (for distribution depots) and "Modular Spine".
THE USE OF SIMULATION IN MATERIALS FLOW PLANNING
Simulation is an immensely powerful tool in warehouse design and warehouse development for providing
answers to such questions as "how many FLTs should be deployed?", "How many cranes?", "What would be
the effect of a conveyor system covering these locations?" Simulation is particularly useful in warehousing
since it incorporates the mathematics of queuing theory in order to test the effect of likely activity. For
example, "How long will vehicles wait to unload by mid-morning, and how many extra docks should be
provided to reduce these queuing times by 75% ?" Virtually every company planning and building a new
warehouse will have used simulation in order to do so. Recent past users of simulation have included Boots, in
building a complete distribution/logistics system, and Littlewoods Home Shopping, for a £40m distribution
centre eventually incorporating 18 cranes and 350, 000 locations. The main benefits reported were:
The ability to test and compare the performance of alternative scenarios put forward
at the 'ideas stage' of the projects;
An ability to monitor/assess the effects of changing requirements by What-If?;
Accurate comparison of alternatives, with all supporting data ;
Problem solving through the ability to test alternative solutions.
The use of simulation requires the building of a computer model of the proposed facility or proposed change -
vehicles, traffic, routes, times, loads etc.. Nowadays, easy-to-use systems which incorporate interactive
animation can easily to built by anyone. The completed models incorporate animation and realism, with the
advantages that people at all levels are quickly able to grasp what is being proposed, and (through
interaction) are able to input their own ideas or get detailed information about what is being shown on the
VDU. For example, by clicking on a fork lift truck in the picture, statistics can be obtained about its
percentage use, distance travelled etc, in operating the warehouse over, say, a specified hour. The training
needed to use an animated simulation package sufficiently well to obtain good results is just a few days. In
reality, users must spend most of the time fact finding, discussing alternatives with colleagues and deciding
objectives. (As a hint, if the student of this course engages the service of a simulation consultancy, perhaps
paying fees in accordance with the time spent, it is essential to find out beforehand precisely what data needs
to be provided, and to have such data readily to hand.) The foremost interactive animated simulation package
in the UK principally aimed at warehousing is Automod, and its sister module Autostat, from Brooks
Software, Reading. Visit http://www.automod.com or phone 0118-921-5600.
1.7 The Installation of Automation
Automation is costly and the more flexible and extensive in design it needs to be, the more costly it gets.
Consequently, there are four important requirements to consider before embarking on it, as follows. There
must be .....
1. sustained, high levels of steady production throughput;
2. a low, stable product range;
3. a high labour content;
4. large individual customer offtake quantities.
Automated equipment consists of electromechanical devices, communication systems and computers.

Electromechanical devices and communications systems include powered rollers, vehicles guided by wire
contacts along floor mounted tracks, automated stacker cranes and other apparatus with feedback and
sensing devices. For example, a common scheme is to install vertical pallet racks of conventional design, but
with a power / computer operated fork lift truck on a track in the gangways, the truck capable of reaching all
pallet heights. The automation then consists of the truck moving along the tracks and moving the forks up
and down, in and out, under the control of a computer program. Many early attempts to automate, however,
were failures. There were three reasons:
A. Technical Overambition.
It was not unknown for the design of early systems to take two or three years to
complete. The designers of the automated system moreover then required that every
movement should be as perfectly meshed in the real world as on paper. Mechanical
devices, however, break down. The scale of early warehouse projects was greater than
experience showed to be practical.
B. Logical Overambition.
In order to automate the warehouse fully, it is necessary for software designers and
programmers to understand and describe its operations fully. Computer programs
must be written and database data properly set up. But many of the activities in the
manual warehouse are simply too involved to describe, and must of necessity rely on
human knowhow and intuition, which cannot be programmed.
C. Commitment and Discipline.
Early automation attempts were looked on as technical and engineering projects.

Success however requires full, multi disciplined team commitment and massive
advance training and publicity. These requirements were not recognised.
To achieve success and avoid the mistakes of the past, five guidelines are put forward.
1. Islands of Automation.
The monolithic automated warehouse is a myth. Instead, automation must be seen as a

set of projects physically isolated from each other. Each project can be put in alone
and should generally be capable of justification in its own right. Examples of islands of
automation are the automatic storage and retrieval of full pallets; and the installation
of automated guided vehicles using wire-to-the-floor, as described above.
2. Flexible Operational Interfaces.
It must be possible for the storeman or warehouseman to take control of operations at

suitable interfaces. For example, if there is a breakdown or incident in the marshalling
of (automated) retrieved pallets, it must either be possible to divert the retievals to a
temporary, manually controlled area or to take over the system.
3. Supplier / Customer Liaison.
The obligations of the automated equipment supplier are not confined merely to the
customer's experience with the technology. He must liaise closely with the customer
as part of a team in setting up training schemes and seeing to other matters (eg in
developing manuals). By the same token, the customer must realise that he also has an
obligation to cooperate fully with the supplier.
4. Dedication and Organisation.
The heart of success in automation is not technology. It is the dedication of the

company and its managers to achieving success, including taking into account the
fears and aspirations of all personnel. Success comes from organisation, competence
and hard work. (These lessons have long been known in the field of big project
development).
5. Partial Automation.
The stores or warehouse supervisor should contemplate partial automation only ... the
installation, say, of AGVs, carousels, automatic weighing machines, labelling etc, each
installed only as and when its use seems to be individually justified on a strictly local
basis.
1.8 Coding and the Stores' 'Vocabulary'
For identification, classification and computer purposes, each unique item in the stores must be assigned a
unique code. Together, the codes and each code's associated information, such as the item's name and other
major features, are known as the stores' vocabulary. One obvious property of a coding system is that the codes
generated through it should be consistent. In fact, codes are often made up using a "hierarchical approach",
based on the particular types of goods in store. An example is the assignment of a 6 figure numeric code (ie
NNNNNN), where the 1st digit is the type of material (ie raw material, component, piece part ...), the 2nd is
'metal' or 'non-metal', the 3rd is type of metal, the 4th the form ('rod', 'tube', 'ingot' ...), the 5th the shape and
the 6th the size. (A well-established methodology is the Brisch system, which is a means by which a company
can put together a coding set itself, geared to its own use.)
For the stores, there are two vital coding issues: memorability and meaning.
Memorability means that the code can be copied down or transcribed onto transactions easily and with
consistent correctness. (Incorrect recording is a major cause of error in stock records.) It has been shown that
to achieve memorability the maximum length of a code should be 7 digits (and 6 would be better - but very
definitely not 8 or longer, unless a barcode or RFID reading system is in place).
The question of incorporating meaning into the code is more difficult. First, it should be said that there is very
obvious merit in keeping to the same coding as used by production and purchasing. However, the general
company scheme may not be best for the stores since it is desirable in this environment for the storeman to be
able to tell from the code that the material he is about to pick or place has certain properties. For example,
suppose that a material which was subject to special quality procedures (QP) had to be handled within the
stores in a certain way. The fact that the material is a "QP" can be stored on the database so that special
instructions are displayed as necessary by the computer system. But to be safe, it may be desirable to include
this on the code itself, so that storemen can recognise it on occasions not involving the computer. A second
example relates to packaging. It may be logically correct to designate the 50kg Box Packet as 01, the 50kg Soft
Packet as 02, the 100kg Box Packet as 03 and 100kg Soft as 04. But it may be safer to code them B50, S50,
B100 and S100 to prevent errors during the physical act of picking. All the attributes of a material qualified
by its package can be maintained on the database internally, available to the storesmen through computer
programs. But it may be necessary to incorporate a number of these classifications in the visible code itself to
help staff in the operational side of their jobs. If so, the risk then arises, of course, of making the code more
unwieldy from the viewpoint of memorability!
1.9 Installing Technology
1.9.1 Batch v. On-Line
Batch.
'Batch' processing means that data events are progressively recorded through some
medium (whether paper forms or an electronic recording collector) and the records
then input to the computer all together. That is, the original data are deliberately held
back from being input to the computer until a reasonable quantity of information has
been collected, so that input, although efficient, is made usually several hours after the
events being recorded. If a transaction is found to be in error when finally submitted

to the computer, there can be a delay of many days before its investigation and final
correction.
On-line.
In on-line processing, data relating to an event is notified to the computer on an

individual basis as soon after the event as possible. (There is usually nevertheless a
brief time delay between the event and the transmission of the record. The delay may
be minutes or, in a slacker environment, one or two hours.) There are two advantages
to on-line processing. First, the central computer database is brought up to date far
sooner, and usually accurately reflects the current situation. Secondly, there is
immediate feedback after submitting the transaction and, if it is in error, the
opportunity exists for immediate error correction by the person responsible for
completing it in the first place.
1.9.2 Data Recording Equipment
Data recorders:
These are hand-held machines similar to electronic personal organisers.

When its capacity has been reached, or after an appropriate period of
time, the device is taken to a terminal and the data that has been captured
is transmitted, or 'down loaded', to the computer.
Radio data terminals (RDTs):
These are hand-held devices which incorporate a small VDU screen, plus a
tiny keyboard (say, 3"). More importantly, they are able to communicate
directly, on-line, with the computer via a radio signal - ie a cable is not
required. Data recorders and RDTs can optionally have bar code scanners
attached and some models are suitable for rugged or hostile environments.
Voice directed picking is a highly effective and increasingly popular technology that
has many advantages in both stores and warehouse operations. With 'voice', workers
wear a headset, earphones and a belt-attached portable computer which enable them
to hear instructions from the computer and to speak words of confirmation as to
action taken - below under Order Picking.
1.9.4 Communications
Electronic Data Interchange (EDI): This medium is perhaps being eclipsed by the
Internet. The term EDI refers simply to the creation of data by one computer, in
computer readable form, and its acceptance directly by a second computer. Usually,
the transfer of data is through a data network known as a Value Added Network
(VAN). The sending company transmits the data with the code of the intended
recipient company. The data is stored on the VAN operator's computer at the nearest
position to the receiver. The receiving company scans the VAN computer at times
convenient to itself for any messages addressed to it. Local networks mean in-house
networks communicating via coaxial cable laid in the premises. Wideband networks
are inter-site, and are capable of carrying vastly greater volumes of data traffic. They
are typically provided by BT between specified major towns and cities. The Internet is
a communication medium based simply on ordinary, existing telephone cabling, and
has the consequent virtue of being cheap. Direct access between a distribution depot
and a central warehouse is via a local telephone call using simple software. Both text
and graphics can transmitted and received.
1.9.5 Weighing and Measuring Devices
Computerised weighing machines. A sample scale can be used to find the 'mean', or
average, unit weight of a product, and the average then stored on a computer. Large
electronic scales are subsequently employed to weigh the main stock entering the
stores or warehouse, with direct links to the computer database holding the unit
weight. Care must be taken to account correctly for the container weight, referred to
as the "tare", and to ensure the items' weight is not distorted by oil, wetness etc. Other
devices of value are simple weighbridges, non-computer weighing scales, calipers and
micrometers. In the process industries, bulk liquids are measured by flowmeters or
even simple dip tapes and dip sticks. Many methods used for measuring liquids are
acknowledged as being problematical, with comparatively wide tolerances arising
inherent in the techniques themselves. Problems may be compounded by the need to
take the temperature of the liquid, and the further need to assume the temperature is
uniform throughout the material's bulk.
Weigh Counting. This method of counting items which are

dispensed from a stores or warehouse is used when items are
small or light. It is normally done on purpose-made weigh
counting scales. (The first thing to note is that a scale should be
selected that has a sensitivity appropriate to the weight of the
items being counted - ie if the items are light, the scale should
be more sensitive). The procedure follows three steps: (1) First,
the "tare", or base weight, of the container in which the parts
are held should be determined most carefully by separate
weighing - say, weight T, which is entered into the memory of
the weighing scale; (2) Next, a sample of the items to be
counted should be taken and counted out most carefully, and
the total weight, including the container, determined. Say
there were 12 items in the sample, and the total weight was
was W. This data is again entered into the memory of the
scale, which is then able to calculate the unit weight of one
item. In our example, this is (W - T)/12, or X. Finally, (3) we
weigh all the items which are to be counted. Say, the weight is
B, including the container. The number counted is given
directly by the counting scale, and here is (B - T)/X. Note that
ideally in order to be sure of the accuracy of the unit weight, 4
or 5 weighings should be taken and averaged. This is because
the differences in weight between the units being weighed is
random and the statistical distribution of these differences is
Normal. The most important factor is to obtain an accurate
reading of the tare weight of the container. Substantial errors
can arise if the same unit weight X is applied in weighings
involving apparently identical, but different, containers, each
container therefore having a different tare weight. Note that a
variation of this method of weigh counting is reverse sampling.
1.9.6 Bar Coding and RFID Tags
Bar Codes
The familiar bar code is the representation of a numeric, alphabetic or alphanumeric

code by a pattern of dark and light stripes, with 'start' and 'stop' characters at either
end, and which can be interpreted, or read, by a light scanning device called a bar
code reader. Bar code readers are either contact or non-contact. Contact readers such
as those used in retail shops are also called fixed beam readers, since the device needs
to be very close to the bar code. They are comparatively inexpensive (£100 +). Non-
contact scanners, or line scan readers, work by repeatedly reading the code with a
laser beam fired by a gun, perhaps mounted on a truck, until the reading is error free.
They cost about £1000. There are a dozen or so different bar coding systems for
assigning a code to a material. One used extensively in the warehousing of consumer
goods, including the outside carton packaging of groceries, is termed Interleaved 2 of
5. It is numeric only, and requires the code to comprise an even number of digits.
With Interleaved 2 of 5, even numbers are represented by the white stripes and odd
numbers by the dark bars. Its advantage is its physical density. In industry generally,
however, there is a preference for the Code 39 system. This is capable of encoding
numbers and letters. Each character is represented by a group of 5 bars and 4 spaces,
and has an in-built check to eliminate mistakes in the physical reading and
interpretation of the code by the bar code reader. Other bar code systems are EAN
(European Numbering System) and UPC (Universal Product System). UPC was
devised by IBM in 1973 and is the one used in groceries in supermarkets. Its
advantage is that the code does not need to be on a flat surface to be read by the
reader.
Bar coding in the stores or warehouse is not always successful even when those
attempting its implementation have carefully assessed that it will be. There are three
issues.
First, there is the matter of ergonomics. Ergonomics is the

science of man-machine interaction, and here means how
codes are to be assigned, how (literally) they are to be attached
to the objects and locations in question, how the codes are to
be read, and what equipment is to be used. It also encompasses
the nature of the computer system that will read the codes and
how associated data, such as quantities, are to be recorded.
The second issue relates to the physical nature of the items

actually to be bar coded and seems to be the most critical of
the three. If there is a wide variety of shapes and sizes, and
many items are irregular or have a unsuitable surfaces, it will
be difficult to devise satisfactory, consistent ergonomically
sound procedures.
Thirdly, if it is intended that incoming raw materials are to be

bar coded by suppliers, their competence and willingness to do
so must be considered (or, at least, their willingness to apply
bar code labels and documents supplied by the company).
If bar coding works well and easily, without a continual struggle to keep it going, there
are two advantages to its use. First, self-evidently, material and location codes are
read correctly and more easily. Secondly, the reading process ensures that each
transaction relating to an activity is indeed raised, and is not forgotten, and that it is
then input to the computer system in a timely manner. (Missing transactions are a
major source of error in attempting to achieve high stock records accuracy.)
RFID Tags (Radio Frequency Identification Tags)
By 'identification' is meant the attachment of a small "tag" bearing the code and
much other data of what is to be identified, and the subsequent reading of the tag code
and data at some later stage by a tag reader. The physical tag attached to the object
may commonly be a label, in a flat, thin, flexible ticket or may take other forms
depending on the application to hand. Important attributes of tags are that they are
robust and capable of functioning in extremely harsh environments and that they are
reusable and can last for many years. The code and other data associated with the tag
is read by a special tag interrogator, a primary function of the interrogator, or reader,
being to excite a component within the tag termed its antenna. Although the
technology associated with RFID tags and interrogators is changing rapidly, as at the
date of this on-line course (2006), the microchip incorporated in the tag 'structure' is
likely to be a silicon microprocessor and the antenna formed from conductive carbon
ink. The silicon chip will be attached to carbon - ink electrodes at the back of the
paper label. (Labels are referred to as smart labels.) Note particularly in RFID tags
that a battery may be incorporated into the tag - that is, a tag may have a small
lithium battery to boost power. Tags with batteries are referred to as active tags and
without as passive tags. Power is transmitted to the tag in the first place from an electric
field created by the tag interrogator. Data is transferred from the tag to the
interrogator through the modulation by the tag of the interrogator signal. With their
extra power, active tags are able to communicate with an interrogator over
considerably greater distances than passive tags (many thousands of feet rather than
only tens of feet). Active tags are also capable of carrying and conveying greater
amounts of data (thousands of bits rather than tens). Not surprisingly, however, active
tags are more expensive. Cost is currently a major issue in RFID technology,
especially as it concerns its widespread adoption in retail.
A critical milestone in the practicality and acceptability of RFID technology has been
the adoption in late 2005 of the GEN2 data technology standard and the ALE standard.
GEN2 governs the basic tag reading technology essential to the production of tags
themselves and tag readers. ALE deals with the collection, management and routing
of data; it addresses the problem of huge amounts of raw data generated by RFID
readers - readers can make multiple readings of the same tag in a fraction of second,
so that this "dirty data" must be filtered. In summary the key benefits of GEN2 and
ALE are the ability to read RFID tags quickly and simultaneously.
Finally, and most importantly, we see from the technical nature of the interaction
between the RFID interrogator and the RFID tag, that two major advantages lie with the
technology and distinguish it from bar coding.
First, that in order to read a tag, it is unnecessary to have a

direct view of it. Communication is by electrical waves and
antennas, and line of sight is no more required than it is
required of a radio in order to broadcast to it a programme
from a transmitter.
Secondly, it is possible easily to read tags which have been

attached to a succession of irregularly shaped items which
would be unsuitable to bar code reading. Examples in
everyday life typical of the application of RFID tags are: car
tagging for toll booths; hospital patients; criminals on licence;
airline luggage; library books; the tagging of wild and
domestic animals; and marathon runners.
For the stores or warehouse, however, one critical application of

tags is in making use of the ability to read simultaneously the
identities of all the tagged components of an incoming* or
outgoing load merely by scanning it from a distance with the tag
interrogator . * Provided the supplier has tagged all materials, of
course.
A second is the ability quickly and easily to verify and count

stored stock, as in cycle counting or in the conduct of an annual
stock take.
Yet a third example, recently announced by Intermec and
Cascade Products, is to mount RFID readers in the tines of fork

lift trucks and verify the correctness of warehouse floor picks via
a computer display in the truck cab.
As well, RFID tags have been attached to stillages to help track

and control the (remarkable!) losses of these devices. A final
example of use relates to a national company distributing wines
and spirits, which wished to double check assembled loads for
correctness on its vehicles before despatching them to
customers, and to a major retailer receiving loads of garments
hanging on rails at its major stores from its distribution
warehouse. Besides these, there are an ever increasing number
of other applications involving the simultaneous, mass reading of
palletised loads at the point of despatch and the verification of
loads at their destinations.
In order to commence a move to RFID, the stores supervisor might first attend a one-
day course on the subject held at the DTI's RFID Research Centre in Bracknell,
Berks.. Further details are obtainable at the Research Centre's website at
http://www.rfidc.com. In addition, it is possible to see RFID in action at an RFID
demonstration site run by Unipart Logistics and others at Oxford. Two consultancies
expert in RFID are Manhattan Associates and Davies & Robson.
1.10 Special Situations
1.10.1 Stockyards
Construction
The stockyard must be sited with immediate access to adequate roads capable of
taking heavy lorries. If it is to be accessed by rail, railway lines should be sunk to
ground level. And if so, if possible, a single line to a deadend in the yard should be
avoided because of subsequent queuing problems. Beyond this, stockyards are cheap
to construct, amounting merely to expenditure on barbed wire or other fencing, plus
the required surfacing. Surfacing will depend on the loads to be stored. In order of
rising cost, they are: Gravel or Ashes - this will not support heavy loads and heavy
traffic in bad weather; Tarmac - popular, though liable to damage and 3 times more
expensive than gravel; and Concrete - 5 times more expensive than gravel, but suitable
for all loads in all weathers. The most important additional feature is adequate
drainage to disperse rain water - even long life building materials are damaged by
constant contact with standing water.
Repairs and Maintenance
The need for a proper programme of repair and maintenance of a stockyard is a

matter of greater concern than points about the original construction. Stockyard
maintenance, especially in Winter, is a constant activity. Areas to watch out for
include: fencing (to ensure that it is fully maintained); waterlogging (drains must be
cleared so that standing water is dispersed ... and Autumn leaves cleared up!); surface
holes (holes must be repaired); and lighting (ensuring floodlighting is periodically
checked).
Layout and Organisation
The gatehouse is the nerve centre for all documentation including the overall company
stock records system. A very minimum requirement is connection to the central office
by phone and fax. Better, even for small stockyards, is a proper telecommunication
link, perhaps involving RDTs. Points to watch in respect of organisation are:
(a) the establishment of a proper location system, with ground areas coded by alley
ways and local areas, perhaps being marked out by posts;
(b) If dangerous or flammable material is stored, the provision of emergency

equipment and the establishment of full procedures;
(c) measures to prevent trespassers, especially children, from entering the area - the
company is liable if children manage to gain access and subsequently come to harm;
(d) stockyards are very frequently seen as a nuisance to residential neighbours -

traffic, noise, lighting etc, so that if possible they should be sited well away from
houses or land where house planning permission may be granted;
(e) setting up an efficient one-way system for traffic, with good signposting;
(f) ensuring that there is supervision during all opening hours, including meal breaks;
(g) neatness and tidyness must prevail to minimise the risk of accidents;
(h) the stock must be cycle counted on a regular basis. Note that it is not unknown in
poorly managed stockyards for corners of stock to become isolated and forgotten.
(i) Remember the effect of weather on signs and, especially, labels. Even plastic labels
can become unreadable after a time, and routine label replacement may be necessary.
1.10.2 Cold Stores
The cost of building a cold stores is about 3 times that of an ambient store. A second
considerable cost is the cost of running the store (and the colder, the more costly): this
must be balanced by the cost that would otherwise be suffered from the deterioration
of the product. As well, temperature controlled vehicles are expensive. The
temperatures needed for the degree of cold clearly depends on what is to be stored.
Thus:
......Frozen Stores ................-30C to - 10C .............................meat, fish
......Chilled Stores ................- 5 C to 0C ..................................fresh meat, fish, poultry
......Cool Stores ................... -1C to + 5C ..................................dairy produce
......Cold Stores ................... +5 C to +15C below ambient .... citrus produce
The critical factor in the operation of a cold store is the activity taking place at the
door. If warm air is allowed to enter the building, ice will form and will be costly to
remove. Solutions to the problem are the installation of a conveyor tunnels; air locks;
and fast acting insulated doors. (A well-known vendor of high speed, insulated doors
is Hormann, in Leicester; Hormann have developed the DOBO docking system,
whereby docking takes place before opening.) A related problem in cold stores is
condensation. Excessive condensation can form on the product and damage it. To
avoid this, loads are best removed in small quantities, with immediate protection using
moisture-proof covers. Note that it is common practice that storemen in cold stores
take a 15 minute break per hour. The most careful watch must be kept on racking,
fixtures and fork lift trucks continually exposed to the cold. Steel can become brittle
and dangerous. (FLTs bought new and destined to work in cold stores are in fact
modified by manufacturers). Repairs to racking are also a problem - oxyacetylene
welding is not undertaken, since welds become eutectic and break. Instead, bolted
racking is used. Repairs to a floor also present difficulties, since there is usually a need
to raise its temperature to effect them. Care must also be taken in product stacking - it
is essential that air should be allowed to circulate the product stored.
1.10.3 Tools Stores
In general, tool control is best accomplished in conjunction with the planning of

materials and jobs, in the normal management of the shop floor. The ability to
associate particular tools with particular jobs by augmenting the database with the
relevant data is not especially difficult. What makes tools different, however, is (1)
that tools are reusable, and (2) that tools have a limited working life, after which they
must be replaced or repaired.
Storage and Retrieval
Although many factories maintain separate tool stores, there

are considerable advantages in incorporating actual physical
tool storage within the standard materials store. The chief of
these is that the strict procedures which govern the stores itself
are then applied also to the management of tools. That is, (a)
access is restricted to storemen only; (b) there is meticulous
booking in & out of material; (c) there is, or should be,
availability of service at all times that production takes place.
The Issue of Tools
The requirement for tools to be issued to the shop floor can be

coordinated from the job release planning data. From this, tool
picking data is prepared each evening and the tools distributed
to the work centres each morning. There will also be direct
requests of more or less urgency from shopfloor personnel
each day. And finally, there may also be 'reverse issues' -
system-generated tool recalls based on tool life calculations on
the database.
Planning Requirements for Tools
(a). Consumable Tools: These tools are generally worn away

over a matter of a few hours in operation, and are then
discarded and replaced by new ones. They include (say) small
grinding wheels, drills etc.. Assuming the annual usage of them
is sufficiently high, a satisfactory method of planning their
stock and replenishment is to employ the conventional 2-bin
system; (b). Medium Life Tools: Many tools such as milling
cutters can be used a number of times - say, for so-many dozen
hours - after which time and after due inspection they must be
discarded or repaired. A consequence of this in planning
future replenishment schedules is the difficulty of accounting
for the stock of tools on hand; (c) Long Life Tools: Tools with
a comparatively long life such as milling fixtures and drilling
or assembly jigs are often associated with a specific
component. If so, the requirement for the tool can be
monitored by associating it with that component's bill of
materials. Three well-spoken of software packages in this area
are Tyco, Autotask (from Sandvik) and Super Capes.
Tool History Database
Where tools are individually specified, with a tool-type id and

an individual serial number, a tool history should be
maintained by recording from other shop floor support
systems the actual hours each tool is in use, along with basic
backup data such as expected life, acquisition leadtime,
operations / components used with etc... Software packages in

this area include the three packages above (ie Tyco, Autotask
and Super Capes).
2. Materials & Materials Handling

2.1 Knowledge and Protection of Materials (including FIFO)
Having a knowledge of the materials that are handled and stored are core requirements of the storeman or
warehouseman. "Knowledge" means knowledge of the materials' sources and suppliers; any special
circumstances in their manufacture; their technical characteristics; methods of measurement; how their
quality is assessed; and the uses to which the materials are put.
The simplest and most reliable scheme that the stores supervisor can adopt for protecting the material in the
store's care is surely adoption of a policy of FIFO (First in - First out). FIFO ensures that the oldest stock is
used first so that it has less chance of deterioration due to the passage of time. Identification of the oldest
material, however, may not always be easy when the storeman comes to make a withdrawal, especially in a
fixed location store. Three methods for doing so are:
(a) Since the stock recording system tracks the dates stock was put away, picking
instructions might be issued taking account of the age of stock to be removed;
(b) When stock is originally stored, its putaway date or batch sequence number should
be clearly marked;
(c) If material is particularly sensitive to deterioration due to time, the medium chosen
for its storage should be geared to enable FIFO to be accomplished readily. For
example, stored objects may be placed at one end of a long bin, and removed by access
to the far end of the bin, the material in the bin being pulled along on rollers (ie live
storage). For any storage medium, staff must be trained to put material away
supermarket style - ie the newest to the back.
For legal, traceability and safety reasons, some types of material must be separated by technical/production
batch. Familiar examples are foodstuffs, pharmaceuticals and parts used in aircraft manufacture. (There may
also be a requirement for traceability under ISO 9000.) Since the batch identification data includes the
storage date, FIFO picking instructions are generally straightforward in such instances.
The stores supervisor is not the only manager who can contribute to reducing the threat of time's passage to
the condition of stock. In todays manufacturing environment, "lean production" techniques which greatly
reduce stock holding can make an even greater contribution than FIFO. For example, purchasing department
must recognise that excessive purchasing lot sizes are expensive and that the cost of stock holding is over 25%
per annum of the value of material held. And the production manager can get smarter in the scheduling of
work, and can vastly reduce production lot sizes by the adoption of fast machine changeover techniques
(which make it more economic to manufacture small lots).
Time is not the only enemy of stock. Others are damp, dust, physical damage and sunlight, usually in that
order, and action to avoid these perils must be taken accordingly. For example, protective coatings of grease
or oil might be applied, or the items might be stored in damp-proof and rigid containers, perhaps in small
quantities for easier, damage-free issue. Potatoes and other items may be stored in humidified warehouses*.
Other examples of protection are the storing of electronic components to ensure that they are not harmed by
magnetic fields or X-rays, the protection of certain agricultural goods by dusting them with insecticide and
anti-fungus powder, and the stacking of timber in an interleaved fashion to permit the circulation of air.
Finally, the safe storage of some goods predominates the whole stores operation. Two examples are the
storage of explosives, requiring a police certificate, and the storage of petroleum, requiring a local authority
certificate. (* One result of storing potatoes in humidified warehouses is to increase their weight, and also
increase their value if eventual payment is calculated by weight.)
2.2 Pallets and Unit Loads
2.2.1 The Pallet
There are some 50m pallets in use in the UK, the majority made of wood from the
Portugese Maritime Pine, a wood harvested nowadays literally as a crop. The pallet is
designed for use with the fork lift truck. The load carrying capacity of the pallet is
determined by its design, construction and weight. The more wood, the stronger the
pallet. When pallets are first bought, a maximum load bearing capacity and the
operating environment in which it is to be used are specified; it is dangerous and
illegal to exceed the specifications.
Plastic pallets are also used, as well as wooden pallets. An advantage of plastic pallets
is that they are capable of easy, thorough cleaning and disinfection. (For that reason,
their use may be insisted on by food manufacturers). Before choosing plastic pallets,
an assessment should be made of the damage likely to be incurred to them due to
stress in loading and unloading operations. For example, pallets made of hollow
plastic may rupture, leading to the ingress of water and dirt. Consideration should
also be given the effect on plastic of conditions of storage: temperatures below -20C
may lead to cracking and fractures, with the implications this has for safety.
2.2.2 The Unit Load
The most critical and distinctive feature of a pallet is its "footprint" - ie its width x
breadth. In UK industry, the standard pallet load platform is 1000mm × 1200mm. As
a consequence, what is created de facto is the standardisation of the loads carried.
Such standard loads are referred to as unit loads - ie individual loaded pallets, built
up, perhaps, from separate packages in the form of a rectangular block, handled as a
single lot and capable of being stacked onto other similarly palletised unit loads. A
major consequence is that the provision for their handling from one company to the
next by standard equipment is easily accommodated. Complete standardisation of unit
loads in terms of their dimensions and maximum weights is referred to as unitisation.
(Unitisation exists in the grocery supply chain all the way from grocery
manufacturers' factories to the retailers' local depots.) A further form of unit load and
unitisation is one based on a standard ISO container, this being 8' wide and 8' high,
and one of four standard lengths (10', 20', 30' and 40'). Container handling also
entails standard equipment - end loaders, side loaders, straddle carriers, gantry
cranes etc..
2.2.3 Pallet Loss
By far the biggest issue relating to wooden pallets is that of their loss. Because they are
so widely used, many staff see them as common property. Indeed, certain
organisations operate pallet "pools" through which they are interchangeably swapped.
But common property has a knack of sticking to some firms and disappearing from
others. It is not uncommon for a very large company to appoint a full time "pallet
officer" - usually a young manager of the investigative type. Hints and tips to reduce
pallet loss are:
(1) to take the problem seriously - measure and report pallet expenditure
and loss, and keep up the pressure;
(2) to mark all pallets Property of the ABC Company if they are not to be
swapped via a pallet pool. This is the only sound identification legally;
(3) to make staff responsible for pallets that they remove from the
premises - drivers carrying palletised loads, for example, must know they
are expected to account for their returns.
2.2.4 Pallet Stacking
While much attention in the past has been paid to individual package design, often
little has been spared for the way those packages are stacked on pallets or how they
can be packed better in standard outer cases. One software package that addresses the
problem is CAPE PACK. This consists of a number of modules for showing how
pallets are to be stacked (the 'Palletise' module), how boxes and containers are to be
filled (the Boxfill module), how boxes might be redefined for better stacking and
filling (the Packfill module) and how new packaging requirements should be designed
(the Cellsize module). There are other features as well, including 'Display Pallet',
giving a 3D ‘inside' view of the proposed stacking of boxes etc.. CAPE PACK is sold
by Cape Systems Ltd. (phone 020-8752-8610).
2.3 Packaging
2.3.1 The Package
The development of a company's packaging is a well- established, dedicated function

in larger warehouses, often entailing the appointment of a packaging manager. His
role is to ensure that the company's packages meet the standards specified, and to
develop new packages in order to increase the competitive edge and reduce costs.
Complaints about split packages or damaged goods must be evaluated carefully to
establish the precise reason. The job clearly involves liaison with package
manufacturers to identify possible applications of new package types. Proposed
changes to packages must be evaluated carefully by the entire material handing chain
as discussed below - by manufacturing (to test handling and filling), by distribution
(for transport and handling) and by the customer (for handling and being of pleasing
appearance). Note that all wood used in packaging which is then exported must,
according to the ISPM15 regulations, be fumigated, heat treated and marked to avoid
the spread of woodland pests.
The principal functions of packaging are given below. In considering them, it should
be noted very obviously that storage facilities and methods of transport also help
determine packaging specifications, as well as the protection itself of the goods to be
carried. In considering the functions, the packaging technologist must assess the
trade-off between factors - for example, the best protection against damage may
involve too great a bulk and too high an increase in haulage weight. Thus: (1).
Protection of the Goods (Environment): this may be especially exacting when material
is being sent to "deep sea" markets - into cold Canadian winters or to Thailand in the
monsoon season. (2). Protection of the Goods (Transport): Fragile goods may require
specific purpose packages with internal package clamps, protective frames, cross
pieces and polyester foam cut-outs in the shape of the product. (3) Handling: this
includes palletisation so that packages can be stacked in a single (ie unit) load. (4).
Recognition: it should be possible for customers to recognise goods quickly and
without error, especially as companies move to more frequent deliveries of smaller
quantities. (So-called "shop ready" packaging is also becoming increasingly
demanded by retail customers.) Counting multiple items within a package is also
important from the viewpoint of stock records accuracy. Finally, there is the question
of advertising and appearance. Students of this on-line course with a special interest in
packaging may care to join The Institute of Packaging, phone 01476-514590. The IOP
have a diploma in packaging technology, and corresponding training schemes.
2.3.2 Packaging Waste
The packaging waste regulations became law in 1997 and were forced on the UK by
the hated European Union. They were intended to reduce the effect of packaging
waste on the environment. The targets set are as follows: recovery (including energy
recovery and compost), 50% - 65%; and recycling: 25% - 45% (at least 15% by
weight of each individual package material to be recycled. Five terms should first be
defined, as follows.
Primary packaging - the package that constitutes the sales unit

sold to the ultimate customer.
Secondary, or grouped, packaging - the package used to

contain the primary packages
Tertiary packaging - the package containing the secondary

packages.
Recovery or reprocessing - (including recycling and

incineration with energy recovery).
Recycling - use of the packaging to make new packaging.
Companies which are required to take action with regard to the regulations are
known by the Environment Protection Agency or Scottish Environment Protection
Agency (SEPA) as obligated producers. By "producer" is meant any organisation
which creates or supplies packaging somewhere along the supply chain to the final
consumer. Examples are the manufacturers of bubble wrapping, manufacturers of
plastic granules, a company filling bottles or cans with drinks or, say, a company
making and wrapping sandwiches. Different targets, termed activity obligations, have
been set for companies depending on their roles in the supply chain as follows:
raw material manufacturers 6%;
converters 11%;
packagers 36%; and
retailers 47%.
A company's obligation with regard to the Regulations is a figure calculated as

follows:
Obligation = Amount of packaging handled × Activity obligation × Recovery target.
For example, suppose a company produces 400 tonnes of steel sheet per annum. Its
obligation under the Regulations would be to recover 400 tonnes × 6% (raw material
manufacturing) × 38% (recovery target) = 9.12 tonnes per annum.
Obligated companies are required: (1) to register direct with the Agency or join a
scheme (see below); (2) to provide it with data; (3) to recover or recycle their target of
packaging, or obligation, as above; and (4) to furnish proof of their compliance.
There are essentially two routes to compliance - individual compliance or compliance

as part of a scheme. (1) I n d i v i d u a l C o m p l i a n c e : the company may work
through waste management companies or scrap merchants, or it can purchase
materials in the first place from these sources. Evidence of recovery is given in the
form of a packaging recovery note (PRN). (2) S c h e m e s: Collective compliance
schemes consist of companies which have clubbed together to fulfil their obligations
by way of the aggregated totals for all their members. Two 'popular' national schemes
are VALPAK and Waste pak. There is also a dairy industry scheme called DIFPAK.
Note that obligations under the regulations are also incurred by importers ... that is, a
company must take on the responsibilities of others in the supply chain outside the
UK. Since their introduction, in true EU fashion, the regulations have actually
reduced the amount of recycling in the UK.
WEEE Directive (Waste in Electrical & Electronic Equipment)
More legislation confronting UK manufacturing and distribution comes in the form of

the Waste in Electrical & Electronic Equipment (WEEE) Directive. This directive
requires companies to set up a means to recover, recycle and reuse equipment
currently being disposed of in landfill sites. Producers are responsible for the
collection, treatment, recovery and "environmentally sound" disposal of their goods
and their financial implications.
2.4 Materials Handling
2.4.1 Introduction
The scope and sophistication of equipment available for materials handling are now
very considerable, and devices are sold by a large, keen, specialised supplier market.
To assist him in keeping abreast of developments, it is suggested that the storesman or
warehouseman should very definitely take and read one monthly magazine in this
field. An example might be ShD (Storage, handling, Distribution). To obtain a free
copy of ShD, complete and submit the form at the magazine's website. For all this, the
natural way of handling materials that are not 'too heavy' is manually. Recognising
the efficiency and cheapness of manual handling, proof should be demanded why it
cannot be used, before turning to mechanical handling, and consideration should be
given to assisting the manual handling process. Examples of ways in which manual
handling might be made easier are (1) giving attention to the handleability of
packages, including those from suppliers; (2) provided waste is not thereby created,
ordering bar and tube in shorter lengths; (3) using box pallets or storing small
components in tote boxes.
The task which must be undertaken before appraising mechanical handling

equipment is to assess carefully the problems to be solved. Analyses must be made of
the loads to be handled and the tonnage to be moved annually, the types of vehicles
making inwards deliveries and involved in despatch, and how they are to be
unloaded/loaded. What lifting gear is required and what speed, power and other
technical characteristics are required also? The cost/benefit case must also be worked
out - the cost of the equipment, its potential life, its operating costs and the savings it
will make.
2.4.2 Equipment for Seizing and Lifting
Devices include multiple tines with hydraulic pads for bricks and concrete blocks,
tipper forks and many others. Clamps constitute the largest family. Examples of such
equipment include: rotating paper reel clamps; mechanical clamps for drums;
hydraulic squeeze clamp; an hydraulic clamp for a drum; mechanically operated
overhead concrete block clamps; and hydraulic bale clamps to squeeze soft loads such
as wool.
2.4.3 Hand Operated Equipment
The humble wheelbarrow is an example of hand-operated equipment, perhaps

modified specially to carry sacks or other particular loads. Selector trucks contain
numerous bins for components and might be wheeled round a factory floor to
dispense materials. Stillage trucks are wheeled platforms pulled by a drawbar, and
are sometimes fitted with a hydraulic lifting facility. Other hand-operated devices
include hand stackers, pulley blocks, chutes, and monorails.Also encountered are
pallet trucks, similar to stillage trucks, but with forks instead of a platform, and roller
conveyors.
2.4.4 Power Driven Equipment
By far the most common device in this category is the electric fork lift truck. Because
of the absence of fumes and hydrocarbon fuel, it is particularly suitable for use in an
indoor, confined space. In fact, there are number of means for powering the FLT,
depending on the truck's desired nominal lift capacity .... for example, diesel and LPG
are typically used in stockyards and other outdoor areas. Ranges of power are: (1) up
to 1 tonne, electric FLT; (2) from 1 to 4 tonnes, electric, diesel or LPG; (3) from 4 to 6
tonnes, diesel or LPG; (4) over 6 tonnes, diesel. Note that for the electric FLT, with the
use of heavy-duty batteries, batteries must be recharged nightly. Otherwise, there is
little difficulty in starting them up, and drivers should be encouraged to switch them
off at the end of their shifts. The lifting principles of the fork lift truck are that the
weight of the truck is is at the rear, and counterbalances the load lifted through the
'forks' of the truck at the front. Visit The Fork Lift Truck Association website. As well
as the conventional FLT, we also find ... (1) reach trucks. Reach trucks operate by
having the forks within the wheelbase of the truck when moving. The forks move out
when material is to be stored or removed. Their advantage is in saving gangway space.
Variations to the reach truck are (2) the side-loading truck (the forks emerge from the
sides) and (3) the turret truck. With turret trucks, the forks rotate 90 degrees on a
masthead. Loads are carried along aisles and gangways as with conventional FLTs
and are then swung 90 degrees for putting away on the racking. FLT attachments
include clamp jaws, booms, hooks and other devices as discussed above.
Driver Regulations
Driving hours are subject both to British regulations and EU regulations. The EU
limits are: daily driving, max. 9 hours (but two shifts of 10 hours in a week are
permitted); per fortnight, max. 90 hours. There must be a weekly rest after 6 driving
periods, and a 45 minute break after 4.5 hours (this can be split into several periods).
2.4.5 Cranes
Overhead electric cranes may typically have 5 or 10 tonnes capacity, and be either
controlled from the floor (the controller walking besides the crane) or controlled from
a cab slung on the crane bridge. 'Goliath' cranes travel along tracks laid along a (very
stout) structure on two opposite sides of a factory floor or a dock road. There are also
stacker cranes and mobile jib cranes, the latter mounted, perhaps, on a vehicle.
2.4.6 Order Pickers
Usually, the driver/picker rises with the truck. They may comprise front or side-
loading forks and cage arrangements round the pallet on which the stock picker can
walk.
2.4.7 Powered Conveyors
Conveyors are widely used in stores. They are especially successful when large
numbers of small items have to be moved quickly and regularly to a certain point.
Clearly conveyor systems might have been more appropriately discussed in Section 1,
since they should be designed in conjunction with the racking or binning layout. An
example of a conveyor arrangement is a fishbone layout. That is, a main conveyor
travels down the middle of the facility and subsidiary conveyors at each side feed it.
The racking in this case is also a fish-bone, being laid out along the sides of the
subsidiary conveyors. The conveyors themselves may be powered rollers, powered
belts, overhead tow lines and sub-floor tow lines.
2.4.8 Automated Guided Vehicle (AGVs)
Automated Guided Vehicles, controlled by computers, are becoming more common

than conveyors and monorails because of their greater flexibility and the fact that one
breakdown does not disable the complete operation - see above. They may follow
underfloor tracking or, by means of optical sensors, white 'route' lines painted on the
stores and factory floor. Other mechanical handling methods and devices include
electromagnets, the use of vacuums, scissor lifts, robots, hoists, continuous lifts and
heavy duty lifts.
2.4.9 Training and the 'Five Rules'
Staff required to operate mechanical handling equipment need to possess manual

dexterity and coordination that are well above average, and these attributes should be
specifically tested for at interview time before these personnel are taken on into the
stores or warehouse. Training itself should be off-the-job and given by an instructor
who knows how to teach - not merely how to 'do' (or how to pass on bad habits!). A
great many equipment suppliers hold training courses, and courses are available on
fork lift truck driving at specialised training companies throughout the UK. The
training curriculum itself covers knowledge of safe loads and operating methods,
driving and operating skill, and theory. It is important that pupils should be willing to
recognise and correct their own mistakes. Also note the mandatory regulations The
Provision and Use of Work Equipment Regulations 1998 (PUWER). In brief, these
regulations require employers to ensure equipment provided for use is (a) suitable for
its intended purpose; (b) has been assessed for risks associated with its use; (c) has
been subject to recorded inspection; and (d) is maintained in good working order. The
so-called five rules associated with this entry in the on-line course are:
1. There should be central decision-making in new moves (ie

moves never previously undertaken);
2. Use of only the correct equipment;
3. Staff must have been trained in any move they undertake;
4. Small stores should know their limits (ie they should not
undertake moves they have no experience of);
5. A stores should ensure others know the scope of its expertise

(other managers may assume the stores can move anything and
may be reluctant to bring in a specialised company from
outside ... say, in rearranging machine tool layouts on the
factory floor).
2.4.10 The Avoidance of Double Handling
Handling a load twice when it should be handled once only clearly increases the
operational load on the stores or warehouse unnecessarily. Typical causes are as
follows:
(a) The stock records system is inadequate so that space

thought to be available to use turns out to be full.
(b) Goods inwards are delivered and off-loaded at an

inappropriate place in the factory, and would have been better
directed, say, to QC or production department.
(c) If we sell EXW or FCA (see below), we are at the whim of

customers with regard to goods marshalling and despatch.
Should we not sell delivered (DDP)?
(d) Lack of space is often cited as an excuse for double

handling. But 'problems are opportunities to improve' - if a
fixed location warehouse is too small, convert the location
system to random (see below).
Equipment Maintenance
Finally, note that the subject of materials handling includes care and operator
maintenance of equipment. Full-scale equipment maintenance by the company's
engineering maintenance section is clearly also a most vital activity. Service and
inspection should be regular, and records must be kept of them and of any repairs and
replacements. Individual items of equipment should be marked with a unique
company id number. An unconnected point is the placing of identifying plates over the
controls of each item of equipment.
2.5 Transport and Despatch
2.5.1 Regulations and Safety
Note that manufacturers and suppliers of 'hazardous goods' are required to classify,
package and provide information on substances listed in the Chemical (Hazard
Information and Packaging for Supply) Regulations 2002. As well, The Transport of
Dangerous Goods (Safety Advisers) Regulations 1999 stipulate the requirements for the
movement of dangerous goods by road, rail and inland waterways. The regulations
make employers responsible for loading, transport and unloading of dangerous goods
and requires them to have a sufficient number of qualified safety advisers to 'sign off'
and supervise the loading and unloading of the goods.
2.5.2 Road
By far the greatest advantage of this mode of transport is that it offers a door to door
service, with goods remaining on the vehicle. Road transport services are frequently
hired on an occasional basis, from a national pool of many thousands of common
carriers. The transport by road of goods into Europe is typically by trailer or in 12
metre containers Although part loads can be despatched, either a haulage contractor
or a freight forwarding agent (see below) may undertake to combine the company's
own consignment with those of other customers in an arrangement referred to as
groupage. Full loads may then proceed to a roll on - roll off ("ro-ro") ferry, to a
container port or to the Channel Tunnel container base.
2.5.3 Rail
The despatch of goods by this mode usually requires either that our own factory and
that of the customer are directly connected to the railway network or that rail links
which are not strictly part of the national rail network are specially built to connect
the supplier and/or buyer to the network (as with steel factories or national breweries,
for example), or that supplementary road operations provide the required network
links at extra cost. Rail truly comes into its own for the transport of heavy, cheap
goods: coal and coke; petroleum products; and chemicals and aggregates.
2.5.4 Ship
The term for ocean going shipping to markets other than Europe or Ireland is deep
sea transport. The vast proportion of goods to be conveyed by deep sea, other than
bulk material, will be loaded in ISO (ie standard) containers on container vessels. The
operation begins when a gantry crane or straddle carrier loads an empty container
onto a vehicle at a container base. This is then moved to the company's premises,
where it is loaded, sealed and returned to the base. It is then transported by vehicle or
by container train to a container port, where a container crane lifts it into a specially
built slot within the vessel. At the destination port, the process is reversed.
2.5.5 Air
The main air freighting services available are: (1) direct: goods, flown out on the next
flight; (2) consolidation, in which: airlines and agents build up an air pallet load from
various suppliers' goods, and despatch the pallet either when it is full or at a published
frequency; and (3) deferred: the airline undertakes to despatch goods when there is
surplus capacity. This service is cheaper, but there is no certainty when the despatch
is to be made. The two types of aircraft used for these air services are: (1) passenger
aircraft, which can carry limited cargo, and (2) cargo aircraft devoted to cargo. There
are few routes which justify the operation of cargo aircraft only. When airfreight
despatches are made, there are very precise regulations issued by IATA, the
international air transport authority. IATA classifies goods as: (1) not admissible; (2)
admissible on cargo aircraft only; (3) admissable on passenger aircraft, but only in
limited amounts; and (4) admissible on passenger aircraft without restriction. In
practice, a large proportion of goods are carried in passenger aircraft. But because
these give priority to passengers and their baggage, there are many occasions when
cargo is shut out at the last moment.
2.5.6 Arranging Transport - The Freight Forwarding Agent
An important intermediary engaged by the stores or warehouse manager to effect the

transport of goods to a particular destination is the freight forwarding agent.
Forwarding agents may operate as individuals or on behalf of transport or shipping
companies. Some deal with worldwide distribution; others specialise, say, in particular
destinations or particular modes of transport. All offer expert, up-to-the-minute
advice to clients on the mode of transport best selected for a particular despatch; they
will arrange for the consolidation of loads and will book space with carriers. Freight
forwarding agents will also advise on required documentation and can act as local
intermediaries with customs officials. The costs of a freight forwarder's services are
generally covered by commissions and margins obtained by him from the carrying
companies he engages on behalf of his clients.
2.5.7 Route Planning Software
Computers hold maps and can be used to plan a single route to a specified destination
- there are several such 'sat nav' systems on the market, which are also used widely in
private cars. What is less well understood is that computer packages can also be used
to plan the shortest total distance for several vehicles distributing material on a single
day. The routes that the computer plans are not the same as would be planned
separately for each vehicle in isolation. In other words, suppose two routes were
planned separately for two vehicles to (say) 10 customer each, and each route so
planned was, say, 100 miles. If a route planning package now planned the two routes
together, it would come up with two different routes for each vehicle from before, and
the total distance would be about 180 miles (ie some 20% shorter than the previous
total of 200 miles). The principle by which the software works is referred to as the
Savings Criterion. Thus consider a Factory F and two customers C1 and C2, with
distances from F of 'a' miles and 'b' miles. With 2 trips, the distance travelled to C1
and C2 is clearly (2a + 2b). With 1 trip, the distance is (a + b + x), where x is the
distance between C1 and C2. Thus the savings by making only 1 trip = (a + b) - x. The
savings by combining the two trips will be greater the further away the customers are
from the factory and/or the closer the two customers are together - that is when (a + b)
is large and/or x is small, or both. Because of this, the transport routes worked out by
computer packages tend to assume a 'petal' shape, with elongated shapes. Packages
also allow the transport planner to incorporate special constraints which meet
requirements particular customers may have about delivery times, by incorporating
individual customer requirements such as early-closing days or the need to deliver,
say, between 11am and 12pm. Transport planners typically review the first-cut
computer routes and key in amendments to cater for special circumstances only they
can deal with. There are many software packages - for example Dayload, Optrak,
Paragon, Routemaster, Trandos, Visit, LogiX and the popular Truckstops (from
Kingswood, Brentford, London, phone 0208-568-7000).
3. Stores and Warehouse Operations

3.1 The Carriage of Goods
Although the company and the external supplier can make whatever joint arrangements they wish in
allocating responsibility for, and carrying out, the many tasks necessary to effect the transfer of goods
between their two factories, they will usually settle the matter by nominating that one or other of the thirteen
standard terms drawn up by the International Chamber of Commerce, used worldwide and referred to as the
Incoterms, should govern the transfer. (New sets of Incoterms are published from time to time. The most up
to date set at the moment is Incoterms 2000, published in December 1999.) To nominate a particular
Incoterm, a specific reference must be made in the contract between buyer and supplier stating which
Incoterm is to apply in the agreement, and also adding the Incoterm's year of publication. However, in
agreeing a particular term, there is no reason at all why the provisions set out in the standard term should not
be modified by the two parties if some special condition is to prevail. For example: "Delivery is to be made in
accordance with Incoterm 'EXW' published by the International Chamber of Commerce in 2000, modified as
followed .... ". Guidelines regarding modifications are included in the book 'Guide to the INCOTERMS',
published by Prof. Jan Ramberg (see below).
There are 13 Incoterms set out in four groups named for the initial letter of the standard abbreviations of
each term included, as given below.
Incoterm Group E (Departure)
EXW (Ex-Works) ... (followed by a named place). The supplier fulfils his obligations
to the buyer when he has made the goods available at his own premises. Note that he is
not responsible for loading them onto the buyer's vehicle. The buyer bears all costs
and risks in taking the completed load from the supplier's premises. Problems for the
stores or warehouse with EXW are that the buyer may delay in making the collection,
so affecting the supplier's storage costs and disrupting his everyday work (for
example, the buyer's vehicle may arrive without prior warning, at a difficult time,
causing disruption and congestion).
Incoterm Group F (Main Carriage Unpaid)
FCA (Free Carrier) .... (followed by a named place) The supplier fulfils his obligations
when he has handed the goods over into the custody of a carrier named by the buyer.
The "place" may be a transport terminal or into a vehicle. FAS (Free Alongside
Ship) ... (followed by a named place) The supplier delivers the goods alongside a vessel
on the quay. The buyer bears all risks and cost from this point. FOB (Free on
Board) ... (followed by a named port of despatch) Delivery and transit risks pass from
the supplier to the buyer when the goods cross the ship's rail at the nominated port.
Incoterm Group C (Main Carriage Paid)
CFR (Cost & Freight) ... (followed by a named destination port) The supplier must
bear the cost of carriage, although other costs such as insurance remain the
responsibility of the buyer. CIF (Cost, Insurance and Freight) ... (followed by a named
destination port) This differs from CFR only in that the supplier is now responsible
for marine insurance as well. CPT (Carriage Paid To) ... (followed by a named
destination) The supplier clears the goods for export and bears all freight costs.
However, liability for loss or damage passes to the carrier (and hence indirectly to the
buyer) when the goods are delivered into the custody of the carrier at the port of
destination. CIP (Carriage and Insurance Paid To) ... (followed by a named
destination) As with CPT, except that the supplier must himself procure and pay for
insurance for the cargo on board ship.
Incoterm Group D (Arrival)
DAF (Delivered At Frontier) ... (followed by a named place at the frontier, before the
customs barrier) Supplier clears for export, and fulfils his obligations when the goods
have been made available at the named point (ie before customs clearance). DES
(Delivered Ex Ship) ... (followed by a named port of destination) The supplier pays all
costs and bears all risks in bringing the goods to the port of destination, and fulfils his
obligations when the goods are made available to the buyer on board ship. DEQ
(Delivered Ex Quay, Duty Paid) ... (followed by a named port of destination) The
supplier makes the goods available on the quay at the destination port, cleared for
import, and must bear all risks, costs, duties and taxes in doing so. The term "Duty
Paid" is added, but commonly the term is modified by the two parties to read "Duty
Unpaid", the wording of the Term being correspondingly changed. DDU (Delivered,
Duty Unpaid) ... (followed by a named place within the country of destination * ) The
supplier makes the goods available at the named place in the country of importation,
and bears all risks and costs except duties and taxes. DDP (Delivered, Duty Paid) ...
(followed by a named place within the country of destination *) The maximum
obligation of the supplier, and the complete opposite of EXW. The supplier is fully
responsible for every cost and requirement in delivering the goods, including the
payment of taxes, the obtaining of an import licence and the payment of import duty.
On the other hand, the proficient supplier is able to affect service through the
judicious choice of carriers and the correctness of his documentation, to the
satisfaction of his customer.
A complete, legally accepted list of conditions, known as 'INCOTERMS 2000', is obtainable - 215pp, £26.75,
and may be ordered from Amazon. As stated above, a further book, providing commentary as well, is'Guide
to INCOTERMS 2000' by Prof. Jan Ramberg, £52.25. It is strongly advised that any stores/warehouse
supervisor responsible for interpreting an Incoterm should obtain a copy of the ICC publication and
Ramberg's book.
3.2 Transfer of Goods and the Law
3.2.1 Common and Statute Law
Much of the law involved in the transfer of goods relates to contract law. Contract law
is a division of the common law. Common law is not a specific law passed by
parliament - instead, it has developed in the UK over very many hundreds of years,
and is based on universal principles. One of these principles, the one behind contract
law, is that we should stick to bargains we have made with other people. The details of
contract law are based upon this principle and on the decisions made in the courts
relating to past cases. As well as common law, there is statute law - laws specifically
passed by parliament. Two statute laws in this area are the Sale of Goods Act, 1979,
and the Sale and Supply of Goods Act, 1994
3.2.2 Delivery of the Goods
'Delivery' is simply the transfer of physical possession from one person to another.
Thus the signing of a delivery note presented by the supplier or haulier simply
acknowledges receipt of the goods. Section 34 of the 1979 Sale of Goods Act
specifically lays down that: Where goods are delivered to the buyer and he has not
previously examined them, he is not deemed to have accepted them until he has had a
reasonable opportunity of examining them to ensure their compliance with the
contract. (The Act also states that the supplier must, on request, give the buyer
reasonable time.)
3.2.3 Acceptance of the Goods
The word 'acceptance' means a different thing in everyday English than in law. In
everyday English, acceptance simply means literal receipt. In law, in effect it means
the buyer's concurrence that the goods delivered comply with the contract's
provisions in a number of vital regards. For example, it means that the delivery date is
agreeable; that the general material state, especially as regards design and quality, is
agreeable; and that the quantity delivered is agreeable. (Agreeable here does not mean
perfect, it simply means the receiving company is content with the matter.) Now it is a
fact of contract law that if there is a breach of conditions of a contract, the contract
can be terminated. Consequently, from the legal viewpoint, since such agreeableness
means compliance with the central contract conditions, the most important effect of
legally accepting the goods is that the buyer can no longer terminate the contract
because of breach of conditions.
Section 35 of the Sale of Goods Act states: "The buyer is deemed to have accepted the
goods when he intimates to the seller that he has accepted them, or when the goods
have been delivered to him and he does any act in relation to them which is
inconsistent with the ownership of the seller, or when, after the lapse of a reasonable
time, he retains the goods without intimating to the seller that he has rejected them".
It is unlikely that the signature of a storeman would ever be accepted in court as
constituting legal "acceptance", regardless of what was said at the time. Note that
timeliness of delivery is regarded as a warranty - a secondary matter - not as a
contractual condition, unless the contract specifically states that on time delivery is a
condition. Only if it is so stated to be a condition can the company terminate the
contract.
3.2.4 'Title', or Legal Ownership
Just because the receiving stores is in possession of the goods, and even if it has
accepted them in the legal sense above, this does not mean it has legal ownership.
Legal ownership of, or legal title to, the goods, is transferred to the buying company
only when the terms of the contract specify that it is to be transferred. In almost all
cases, the contract will stipulate that title is transferred only when payment has been
received. One reason for this is that if the buyer were to become bankrupt before he
had paid for the goods, and the supplier still retained legal title in them, the supplier
could claim for their return by the receiver in bankruptcy. If it were the buyer who
had title to them in these circumstances, however, the receiver would sell the goods to
pay off his debts.
3.2.5 The Processing of Raw Materials
Section 19 of the Sale of Goods Act specifically deals with retention of title by the
seller as discussed above. If, then, goods are held by the buyer in their unaltered and
original form, they may be reclaimed by the supplier in the event that the buyer
becomes insolvent or fails to make payment, as already mentioned. However, if the
goods have been processed, so that the original material has lost its identity, it is held
that the material sold has become the buyer's property regardless of the supplier's
retention clause to the contrary. However, even though the original goods are lost to
the supplier, if the buyer is in possession of other goods relating to a separate, second
contract with the same supplier, albeit these being already paid for, title in these other
goods can be claimed by the supplier against payment for the first contract. Among
other things, this obviates the need for the supplier continually to identify and mark
the materials sold to the buyer - for example, when materials are being supplied in a
succession of repeat orders.
3.2.6 Bailments
There are many instances in manufacturing where the company receiving goods never
does become the owner of them. For example, it may be sent components so that it can
perform a specialised technical operation on them. When this has been done, the
components are to be returned or sent on to a third party. Again, the company may
receive free issue material from its customer for use in a job being undertaken on its
behalf. Transitory goods in these circumstances are referred to as bailments, the party
supplying them being the bailor and the party receiving them the bailee. A formal
definition of bailments is that they are "goods delivered in trust upon an expressed
contract that the trust be faithfully executed on the part of the bailee".
Finally note that any attempt by the supplier to impose some condition on the buyer when he makes the
delivery is invalid - it is not part of the original contract and should be ignored - examples are: (1) the supplier
must be notified in 3 days of ...; and (2) the supplier is not responsible for damage discovered after delivery.
3.3 The Principal Steps and Official Notes in Ordering and Receipt
I Notification of the Order (Purchase Order)
Purchasing department sends a copy of the supplier order to the stores with the
identification and quantities of materials, date to arrive and mode of arrival.
II Confirmation of Delivery (Advice Note)
The supplier sends the firm a note in the post or on fax saying the goods are being
despatched. Details are included of all items, codes, quantities, the company's order
number an the supplier's own reference number.
III Stores Preparation
A single delivery can involve a great deal of work so that labour and equipment
planning are important. The busy stores will also wish to schedule suppliers' deliveries
where possible to obtain an even flow of arrivals throughout the day.
IV The Delivery (Delivery Note and Consignment Note)
A note giving details of the delivery should accompany the physical goods. One of two
procedures only should then be followed: A delivery note will be accompanied by a
consignment note if the suppliers' goods (the delivery) are being delivered by a third
party haulier. Details must be transmitted to Purchasing and Production, and to Stock
Records.
V Unloading and Inspection (Unpacking Note)
3.4 Quality and the Receipt of Goods
3.4.1 Introduction
Every stores supervisor is concerned about the quality status of incoming materials.
Occasionally, it is possible for the receiving company to be assured of 100% incoming
quality conformance. This occurs when the supplier undertakes to perform "statistical
process control", or SPC, at his place of manufacture. This usually also involves an
inspection of his procedures by the purchasing company's quality control manager,
and the issuing by him of a supplier accreditation certificate. If this has been done, the
incoming material can be received straight into stock or, if a Just-in-Time system is in
operation, straight to the production line.
3.4.2 The Main Decision on Incoming Quality (The Breakeven Point)
The level of quality that an external supplier agrees it can and will send to the
company should be agreed jointly by the supplier and the company's quality control
manager after due observation and discussion of his proven quality performance over
some time. For example, after discussion of his manufacturing process, it may be
decided that the supplier can, and will, meet a target commitment of 1.5% non-
conformancies. (A 'non-conforming' part is one not meeting specifications, also known
as a 'defective'.) The main decision at this point, for (1) a particular material, from (2)
a particular supplier, at (3) an agreed percentage non-conformancies, is based on two
factors as follows:
(a) the cost of inspecting one incoming part, k1, and
(b) the cost of a non-conforming part entering production, with the need then to scrap
it or rework it, k2.
What is now calculated is the "breakeven point", or BEP, as follows:
BEP = k1 / k2 x 100%
For example, if k1 is 15p and k2 is £10.00, the BEP is 15/1000 × 100% = 1.5%.
The decision that is made is as follows: (1) if the incoming percentage non-
conformancies that has been agreed, as discussed above, is greater than the BEP,
100% inspect the incoming parts; and (2) if the incoming percentage non-
conformancies is less than the BEP, allow all parts straight into production, with no
inspection or checking. For example, if the incoming parts are declared by the
supplier to be 2.9% non-conforming, and the BEP is calculated to be 1.5%, it is cost
effective to 100% inspect. If the incoming parts are declared to be 0.3% non-
conforming, it is not cost effective to inspect - the parts should be admitted straight
into production.
Note that as a matter of policy, some incoming parts are always 100% inspected,
regardless of the rules above - for example, safety critical devices, pharmaceuticals
and aircraft parts. Other parts are never 100% inspected - fuses, ammunition and
cylinders of gas.
3.4.3 The Inspection of Incoming Parts by the Stores
If inspection is to be performed on incoming parts, the advantage of its being

performed immediately on arrival by stores staff are speed of throughput and overall
reduced stockholding If incoming goods are required to be quarantined, and quality
control department then notified to perform the inspection themselves, there is
inevitably a delay in doing so, perhaps of several days. Among other things, this
means that materials must be ordered and delivered earlier than they are otherwise
needed. The overall stockholding burden on the company is consequently
proportionally greater than it would be if material was inspected by the stores on
receipt. The two circumstances of inspection are 100% inspection as commented on
above, and sampling inspection, described below. Inspection of parts by a member of
stores staff is simply on a "go / no-go" basis. A particular physical characteristic is
decided on for test by quality control department, and the storeman is simply
required to examine whether the part is conforming or not conforming with respect to
that characteristic. An example might be the diameters of incoming steel rods, which
can be very quickly tested by a "snap-to" gauge, a snap-to gauge being a simple plain
metal device with customised holes of different dimensions drilled into it. Thus if a rod
is being tested, and its diameter is too large, the rod will into neither of two particular
holes on the gauge. If its diameter is too small, it will fit into both of the holes. If it is
within specification, it will fit in one of the holes but not the other.
3.4.4 The Sampling of Incoming Parts
There are four circumstances in which the stores are required to sample incoming
parts:
(1) when the percentage of non-conforming parts guaranteed

by the supplier happens to be very close to the breakeven
point, BEP (see above);
(2) when the supplier simply cannot guarantee any particular

percentage quality at all;
(3) when experience shows the actual percentage non-

conforming which is sent is erratic from batch to batch; and
(4) where 100% inspection is otherwise indicated, but is

infeasible because the parts are destroyed on test.
The first thing to say is that sampling is an exact science and a major part of the
subject of quality, involving the use of well-established, mathematically based
"Sampling Tables", each containing a large range of individual sampling plans (see
below). (Any quality control manager who believes that sampling means the selection,
say, of 5% of incoming parts, or some other percentage, as he sees fit, should read up
on the subject.)
Sampling Plans and Sampling Tables
A sampling plan specified in a Sampling Table first requires the user to determine (1)
what physical characteristic of the incoming units determines whether a unit is
'conforming' to quality requirements or not; (2) p, the percentage of non-conforming
parts expected to be in the batch, usually as agreed with the supplier; and (3) the
number of units in the incoming lot to be sampled (the number of units is traditionally
referred to as N.) The sample plan itself, set out in the Sampling Table for the
particular combined value of p and value of N specified, then states the size of the
sample to be taken from the incoming lot, referred to as n (and which is to be 100%
inspected), and the 'acceptance criterion' c. The acceptance criterion means that if
there are c non-conforming units in the sample, or fewer than c, the whole lot of N
units should be accepted. If there are more than c non-conformancies, the incoming
lot should be rejected in its entirety.
The two most popular Sampling Tables are known as MIL-STD-105E and Dodge-
Romig Set IV. However, the storeman or stores supervisor will not be responsible for
selecting a Table. This will be specified jointly by the supplier and the quality control
manager. Instead, what the stores need to understand are (1) the idea of a "sampling
plan", as explained above, (2) the difference between single sampling and double
sampling, explained below, and (3) the procedures involved in each. Thus:
Single Sampling
As stated above, in order to look up and read the appropriate sampling plan from
those included in the chosen Sampling Table, what must be specified are N, the size of
the incoming batch, and p, the percentage of non-conforming parts expected to be in
the batch (ie agreed with the supplier as a target). What the sampling plan will then
specify are n, the size of the sample to be taken from the incoming batch, and c, the
'acceptance criterion'. When the sample has been taken and 100% inspected, if the
number of non-conformances in it is less than or equal to c, the batch is accepted; if
the number of non-conformances is greater than c, the incoming batch is rejected.
Double Sampling
As before, in order to find the appropriate sampling plan from the chosen Sampling
Table, what must first be specified are N, the size of the incoming batch, and p, the
percentage of non-conforming parts expected to be in the batch (ie agreed with the
supplier as a target). What the sampling plan will specify are n1 and n2, the sizes of
the first and second samples, and c1 and c2, the two acceptance criteria. When the
first sample is taken, if the number of non-conformances is equal to or less than c1,
the incoming lot is accepted (ie a second sample is not taken). If the number of non-
conforming items in the first sample is greater than c2, the incoming lot is rejected
(again, a second sample is not taken). However, if the number of non-conforming
items in the first sample is greater than c1 and less than or equal to c2, the second
sample of size n2 is taken. If a second sample is taken, then the rule is that if the total
number of non-conforming items in the two samples combined is less than or equal to
c2, the incoming lot is accepted. If it is greater than c2, the incoming lot is rejected. It
should be noted that double sampling is far cheaper to conduct than single sampling,
since n1 is about half the size of n and taking the second sample is not usually
necessary.
Finally, what does the stores - and company quality - gain from
sampling? Firstly, with sample plans from the MIL-STD-105E
tables, it receives an assurance that if a batch of parts is
accepted under a plan, there is a 95% chance that in reality the
parts in total will be at the value specified for p% or better.
Under the Dodge-Romig Set IV tables, the company is assured
that if the parts overall are worse than p%, there is a 90%
chance the incoming lot will be rejected. As far as the late Harold
Dodge was concerned, the justification for sampling was that if a
supplier's batch of parts failed the sampling test, the whole lot
would be returned to him, not just the failing components. The
pressure on the supplier at that point to sort out his own
problem is then very considerable.
3.5 The Issue and Despatch of Material
The speed and accuracy with which requests for stores or warehouse stock are handled are often pointed to as
primary indicators of the efficiency of the whole operation. There are two good reasons for this, relating to
the physical ability to handle stock and the accuracy of the stock records.
3.5.1 Stores Issues within the Factory
For a stores, the question of authorisation is a conflict between the exercise of control
and the pursuit of flexibility. Control can be by the maintenance of lists of authorised
people or job functions. (These are, however, often difficult to keep up-to-date, and
their use may break down when critical personnel are off site.) The overall procedures
are fairly standard throughout industry. The following steps are representative: (1)
compilation of an issue note; (2) authorisation; (3) requisition check; (4) scrutiny by
stores;(5) identification of goods; (6) selection (physical); (7) issue of stock; and (8)
update of records.
The terms met in issue documentation include stores requisition, requirement voucher,
stores indent, issue ticket, stores order, demand note, kit marshall list, stores schedule
and picking list ... nine terms all meaning the same thing and containing data
regarding the codes and/or descriptions of the goods, quantities, works order
numbers, cost centre codes, serial number and so forth. The types, methods and
circumstances of issuing stores material may typically be as below.
issues on request - 1: the user comes to the stores and presents

a duly authorised note;
issues on request - 2: a note is sent in by hand or internal mail

for a physical issue at a later time. This is ideal, especially
when the requirements are complex, since the work involved
can be interleaved with other jobs in the best way;
issues on request - 3: low value items may be requested

verbally, without a note, and simply handed over;
scheduled issues to production: material requests in this

category are likely to come direct from production control
department. Goods are physically issued into a marshalling, or
kitting, area or direct to a work station in the shop. Documents
are likely to be prepared by a computerised planning and
control system, which may simply generate assemblies and kits
according to a known bill of material formulation;
imprest issues: (the word imprest means a 'loan' or 'advance')
certain materials may be kept in local areas - for example,

line-side stocks in assembly. Each week (or better, each day), a
supervisor prepares a list of replenishment requirements after
counting the remaining stock. The remaining stock may also
be calculated rather than counted, by a highly error prone
system based on completed production, referred to as
backflushing. Thus if 1 unit of P is used to make 1 unit of Q,
and 500 units of P are originally issued, and achieved
production is 175 units of Q, there "must" be 325 units of P
remaining. Since the system always goes wrong, it is wise to
issue as little stock in the first place, and simply rely on
counting to maintain the records;
replacement issues: The user must present to the storesman an

old, used up item (eg a burnt out motor);
loan issues: often, tools and instruments needed for plant

repair work;
bulk issues: these are usually made in set quantities to

production work centres or lines. They must be carefully
monitored and costed to avoid waste and wastefulness;
allocated issues: material may be received into stores from a

supplier intended for a specific, identified works order or
department. The greatest care must be taken to ensure that it
is strictly reserved for and issued to that job or user, and no-
one else. A variation on this theme in the process industries is
the division of stock of the same item - say, a chemical - into
different grades of quality, with certain grades restricted to
certain uses or jobs;
capital issues: the identity of the capital equipment requiring

the material is recorded in the records for financial accounting
purposes. They are often also allocated issues.
3.5.2 Despatches outside the Factory
Despatches to outside will normally be of regular sales products to our customers,

from whom we shall eventually obtain payment. Since the company will lose direct
control of the goods, checking must be rigorous. The procedures are typically as
follows: (1) the recording of customer demand; (2) production of documentation; (3)
the distribution of documentation; (4) order picking; (5) the loading of stock; (6)
transportation; (7) return of documents/notes; (8) the analysis of data. Note that a
very effective way of checking the correctness of a final despatch is through RFID tags
- see above.
3.5.3 Load Assembly
Despatches to outside take on a different complexion when they are large loads sent on
a frequent and perhaps regular basis. Load assembly in these cases is an important
operational activity that demands skill, planning and investment. In its narrowest
sense, the term means the physical stowage of goods for immediate despatch, and is
related to route planning above. As stated there in different words, one of the
tradeoffs in logistics is between economy of cost, epitomised by certain types of routes
typically planned on a variable basis from day to day or week to week, and the desire
by customers for deliveries at specified times irrespective of whether their delivery is
light or heavy. That is, the tradeoff is cost v. customer acceptability. However,
whatever the time of day of delivery, customer acceptability is increased if the
distributor has made a good job of physical loading - for example, by the avoidance of
damage to goods, by arranging the load in a way conducive to straightforward
unloading ("first on, last off") and by swift and efficient vehicle turnaround.
The actual planning of the vehicle load requires access to certain basic data, such as:
(a) vehicle capacities (cube and weight); (b) drivers' hours; (c) customer locations
(computer-based maps can find the standard driving time from the location
coordinates); and (d) the delivery (or collection) time associated with the volume of
goods per order. The loading of the vehicle is then a two-step procedure as follows:
Step 1: Take the first order to be loaded (ie last unloaded),

establish time from the warehouse to customer, including
delivery operations. Check driver's time. Check vehicle
capacity.
Step 2: Take the next order and add the time to travel/deliver
from last customer to this customer. Check driver's time and
vehicle capacity. If the time or capacity is exceeded, the load is
already complete. Otherwise, repeat Step 2.
Software has been successfully used to manage load assembly in warehouses. It will
determine the original stock picking sequence by reference to the destinations and
routes to be travelled by the vehicle(s), and is closely linked to route planning software
above. The system may also be technically integrated with radio data terminals or
RFID tags (see above). There are many software package on the market, often
incorporated as modules within Warehouse Systems - See Dispatcher CS from LIS
Warehouse Systems Ltd, High Wycombe. Another package also well spoken of is
Paragon.
Vehicle loading and unloading can be assisted by a number of devices. For example,
especially with a large number of "drops" (ie individual deliveries) involving small
packages, doors can be provided in the side of the vehicle. Attention must be given to
platform heights so that mechanised equipment for loading/unloading can be
efficiently used. Loading/ unloading itself may utilise: pallet trucks; wheeled pallet
cages; rollers in the floor of the vehicle; overhead conveyor rails for hanging loads; the
`Jolada' system of pallets on floor channels moved by jacks; vehicle cranes (for building
material);and tail lifts. There may also be the use of securing devices to ensure to loads
do not fall in transit - shoring bars, tie rails, dunnage bags.... Note that when large,
single drop loads are involved, it may be sensible to consider the use of 'swap bodies ' -
that is, demountable trailers that can be left at the customer's premises for unloading
at his leisure and which are taken back empty the following week when the next load
is delivered.
4. Special Topics
4.1 Variable versus Fixed Locations
The flexibility of a stores and its ability to adapt to changing circumstances is greatly helped by the adoption
of a variable (or 'random') location storage system. The traditional method of storage, the only one available
before the days of computers, is the fixed location system. In the fixed system, every item to be stored is
allotted a storage location. In the variable system by contrast, all of the stores locations are maintained as a
file by the computer system, and, for each one, the product and quantity currently stored there. When
incoming stock is to be put away, the software determines the most suitable empty location for its storage,
employing a computer algorithm as discussed below. When stock is to be retrieved, its location is found by the
system and picking information issued. The advantages of a variable system include the following:
1. Far less space is needed for stock than with a fixed location system. Space savings of
30% can be expected. The main reason for improved space utilisation is, of course,
that with a fixed location system, the (fixed) space made available must be sufficient
for the maximum stock holding. The full space advantages of a variable locations,
however, implies smaller locations and will require the manager to consolidate stocks
of the same product on a continuous basis.
2. A changing mix of items over the years is catered for quite naturally;
3. The storage of seasonal goods and very fast moving goods is accommodated
automatically without recourse to overflow areas. In a variable system, sudden stock
surges are accommodated simply by the occupation of more locations;
4. It is easily possible to segregate/quarantine incoming lots of material, assigning

them exclusive locations, if this is desirable or necessary for technical or commercial
reasons.
As well, variable locations make for smoother day-to-day operations. Thus in putting away, the storeman
need not concern himself about finding space - the system will direct him immediately to a guaranteed,
suitable location. And in picking multiline orders, the system will work out his shortest travel route and
guarantee both the correctness of the locations and his adherence to FIFO principles (see below).
Before listing a number of software features required, two examples are given of data processing in (a)
putting stock away in a variable system, and (b) retrieving stock. The examples relate to a product P50 in a
storage facility in which locations are coded according to the following scheme: ARRSB, where A = aisle code,
RR = rack number, S = shelf code, and B = bin number. (Thus Location C10B4 is aisle C, rack 10, shelf B, bin
4.)
(a) Putting Away
On date 12 November, it is required to store 200 units of P50. The current stock position of P50 before this is
done is as follows:
Location...............................................Quantity....................................................Date Stored
....A04F1...................................................450........................................................10th October
...A06C3 ...................................................500........................................................30th October
..A07A2 ....................................................120 .......................................................18th September
Total ........................................................1070.................................................................n/a
The computer scans the database for an empty location as near to existing stock of P50 as possible, and
directs the storeman to put the stock in Location A08G4. After he has done so, and the transaction has been
processed, the stock position of P50 is as shown in the next Figure.
....A04F1...................................................450........................................................10th October
...A06C3 ...................................................500........................................................30th October
..A07A2 ....................................................120 .......................................................18th September
..A98G4 ....................................................200 .......................................................12th November
Total ........................................................1270 ...............................................................n/a
(b) Retrieval
After the storage on 12 Nov, it is required to withdraw 150 units of stock of P50. Using the FIFO principle,
the computer determines that 120 units are to be retrieved from Location A07A2, and the balance of 30 from
Location A04F1. After the two withdrawals have been made and the data transactions processed, the stock
position of the product is as shown in the final Figure figure below.
....A04F1...................................................420........................................................10th October
...A06C3 ...................................................500........................................................30th October
..A07A2 .......................................................0 ............................................................... n/a (*)
..A98G4 ....................................................200 .......................................................12th November
Total ........................................................1120 ..............................................................n/a
(* This empty location would not, of course, be displayed - it would simply "disappear" from any association
with P50.) A worry expressed by many stores managers considering the switch from a fixed location system to
a variable one is that stock may be placed but the location wrongly recorded, the stock thereby becoming
"lost" since its actual location is no longer capable of discovery through the system. A number of safeguards
are available here. First, if a storeman is directed by the system to place stock in a location supposedly empty,
and finds it occupied, he must abort the placement and report matters so that an audit of the location can be
carried out. Secondly, periodically, all locations recorded as being empty on the system can be printed out,
and a quick visual check made to verify that they are indeed empty. Finally, a powerful verification system
based on secondary location codes can be instituted, as given below.
The Magic Number Method:
A unique, randomly generated secondary code is assigned to every stores location, and tagged to the end of
the primary location code. For example, the secondary code 3729 may be generated and tagged to primary
location code A08G4 to give a new code as follows:
A08G4-3729
When the storeman puts stock away at a location or retrieves it, he must record on the transaction the full
code of the location, including the tag. The computer checks the validity of the full code and rejects the
transaction if the primary code and the tag do not match. For example, suppose the 200 units of P50 in the
figure immediately above had not been placed at Location A08G4, but had been wrongly placed in, say,
Location A08F4 instead, Location A08F4 having tag 6881. The storeman records on his transaction "A08G4-
6881" (he thinks he has placed it correctly!) The transaction is rejected because primary code A08G4
corresponds to tag 3729, not 6881.
There are numerous software packages on the market offering a variable location putaway and retrieval
system, and all proprietary warehouse management systems (WMS's) include this facility. There is great
scope in the design of any such system to contribute to stores flexibility and effectiveness. However, many
packages are, frankly, poor, and any student of this on-line course who is going down this road is urged to
take the greatest pains in evaluating alternative systems. Investigation must be thorough, and detailed
answers must be given by the various software vendors to questions. The following issues and package
capabilities should be closely gone into.
(1) As stated in Section 1, in stores jargon, the easiest stores locations for putting away
and picking are referred to as "the golden zone" - locations which are between waist
and shoulder high, and which are close to a central point in the stores. (Next come
locations in the "the silver zone". Finally, the slowest and most distant locations make
up "the bronze zone".) In the system, a fundamental requirement is to be able to
nominate locations and zones maintained by it in this manner, and as well to be able to
nominate certain locations within these three zones as suitable for special storage (eg
large, long or secure - categories peculiar to the company's types of stored items);
(2) What is next required of the system is that it should direct stock to be put away in
locations which make best use of storage. Again as explained in Section 1, the criterion
usually used is each item's pick density. Pick density recognises the fact that the
company wishes to optimise the use of the golden zone, and that consequently it should
take into account how much space is taken up by items to maximise the amount of
picking that takes place there. For each stocked item, the supervisor must determine
its volume-movement, V. This is defined as V = T × C, where T = the average total
number of units of the item put away and withdrawn per month and C = physical size
of each unit - ie the space occupied by one item, measured in cubic inches. If P = the
average number of putaways and withdrawals per month, then each item's pick
density D = P / V. The company should determine the pick density of each item and
record this on the system. The system must allocate items with the highest pick
densities to the golden zone, items with the group with next highest pick densities to
the silver zone and those with the lowest densities to the bronze zone;
(3) In addition to pick density, the system must also take account of special storage
problems such as size, weight and length. These needs must be combined with pick
density for putting away;
(4) Where a choice of locations exists in storage, the system should select the location
nearest to existing stock of the product being stored. The natural affinity of stored
items should also be considered - for example, Products A & B are distinctly different
items, but 70% of all orders to pick A also include a need to pick B (eg cans of
adhesive and ceramic tiles).
(5) In stock retrieval, adherence to the FIFO principle (first-in, first-out). Besides
conforming to good storekeeping practice, this rule will also tend to lead to locations
being emptied at the fastest possible rate, thus freeing space for further storage. (In
the second figure above, the oldest stock is at A07A2, and withdrawal of 120 units
leaves the location empty and available for further use. In the last figure, the oldest
stock is at A04F1, and this location will be continually selected for picking until it too
is empty.) However, the principle of FIFO in the system cannot be divorced from the
good practice of picking stock so as to empty locations as soon as possible (thus freeing
them for further use). And on top of both of these matters is the question of stock
consolidation - for example, should the system direct consolidations, and if so, on what
basis? - partial pallets, partial shelves, partial bins ...?.
(6) Directions to storemen and warehousemen as to picking routes is clearly also

within the ambit of the random location program. Dramatic reductions in pick times
are often obtainable by the employment of mathematically based optimisation
routines for working out superior pick sequences. (An example of one such routine
relates to a "man-aboard" picking vehicle - this makes one traverse of the aisle for
picks from high locations, then a second traverse for picks from low locations,
avoiding excessive slow raising and lowering of the vehicle.)
In order to be successful, the operation and management of a variable location system

demand meticulous attention to accuracy in recording data and promptness in
communicating it through a sound on-line system. Training is of the essence - staff
must thoroughly understand the system and must follow through any errors revealed
in its day-to-day operation. For example, if a storeman is directed to put away items in
a location that is supposedly empty but which in practice turns out to be occupied, it is
not sufficient merely to abort the put away and find somewhere else. The reason for
the problem must be investigated, the source of the error must be found and the
system improved.
Finally, a storeman in a variable location store should be appointed as "Mr Storage

Planner". The appointee's job is to control the system and keep data up to date (eg
pick densities). The storage planner should also direct consolidations and must be able
to override the system where there are clashes, say, between FIFO and emptying
locations, or in identifying affinities between products.
4.2 Order Picking
4.2.1 Cost and Picking Performance
Order picking is a principal activity of the establishment, and the efficiency with
which it is done is a prime measure of performance. The way that order picking is
organised should be constantly in the mind of the stores supervisor or warehouse

manager in the light of changes to the number of orders and number of items per
order, changes in technology and changes in costs. The manager should also be fully
aware of the broken down costs of picking in his particular warehouse - ie where the
time is spent. For warehouses generally, labour overall accounts for 60% of total
warehouse costs, and the split of labour costs by activity is typically:
.............................................................................................Percent Labour
...............................................Receipt of Goods ............................15 %
...............................................Storage ............................................10 %
...............................................Order Picking ................................55 %
...............................................Despatch/Consolidation ................20 %
Regardless of other warehouse costs associated with picking, therefore, such as

supporting equipment and the unavoidable costs associated with holding stock itself
(insurance, rates ...), picking itself accounts for 33% of direct total costs (ie 60% ×
55% = 0.33).
An accepted general measure of picking performance is as follows:
Total Labour Warehouse Time (in minutes) / Number of Order Lines Picked
For example, suppose in one week the labour hours spent in picking came to 200.0 hrs,
and over this time 400 orders were picked, with an average of 6.0 lines per order (ie 6
different products ordered, each associated with the order quantity specified). The
picking rate is thus:
200.0 x 60 minutes / 400 x 6.0 lines
= 5.0 minutes per line
Although the breakdown of activities which make up a 'pick' will vary from
warehouse to warehouse, the following are typical, quoted in a Dexion study published
some years ago.
...........................................Activity .....................................................Percent of Time
..........................................Travelling ...............................................................60%
..........................................Extracting ...............................................................20%
..........................................Searching ...............................................................10%
.........................................(Documenting +
.........................................(Reaching +..............................................................10% for all
.........................................(Sorting +
..........................................(Counting
---------------------------------------------------------------------------------------------- 100%
From the previous figures, if picking constitutes 33% of total warehouse labour costs,
and travelling to and from the picking face is 60% of that, then travelling to and from
the stock to pick orders constitutes about 20% of all warehouse labour costs. The
possibility of substantially reducing this time is clearly a serious matter. Ascertaining
the statistics above for a particular warehouse requires careful thought, then
measurement, and then calculation. The video-ing of operations is often an effective
way to obtain the raw data.
4.2.2 Reducing Travelling Time in Picking
Clearly from the figures above, a reduction in picking travelling time is the Number
One aim in improving picking efficiency. It is not the only means, however. Other
tasks that might come under scrutiny are: Documenting - use of the computer to
direct the picking operation and automate the flow of information; Reaching &
Sorting - consider Stock to Picker systems (see below), voice directed picking, pick-to-
light and the installation of automation; Counting - weighing on digital scales and
greater use of pre-packing. Nevertheless, the main cause of lost time remains
travelling, and here the most important issue is whether there should be one-step or
two-step picking!
One-step order picking
One-step order picking is where the customer's order is satisfied by picking stock for
it direct from the main body of the stores. The stores employing one-step picking are
often low throughput with a small number of stores staff.
Two-step order picking
Two-step order picking is where an intermediate, transient secondary stores is

established, that lies, logically speaking, halfway between the customer's order and the
primary stores. That is, in two-step picking, substantial amounts of stock are picked
from the primary stores into a secondary store - for example, a "mini-store" or
picking face. Then, customers' orders themselves are picked from the mini-
stores/picking face. Two step picking is associated with larger stores or warehouses
handling large numbers of comparatively small orders. The most important decision
of all in picking efficiency, therefore, is to decide between one-step and two-step. To do
so requires painstaking assembly of data, calculations and, possibly, the use of
simulation as described in Section 1.
4.2.3 One-Step Order Picking
i. Picking Multi-Line Orders
All of the items on a multi-line order will be picked on a single picking trip. The
importance of locating the stock in the first place, perhaps by the picking density
method, has been dealt with earlier. Also mentioned was the matter of working out
superior picking routes, perhaps by complex mathematical means. It may also be
possible to combine several orders into a single multi line order by order bunching.
There are numerous ways orders might be bunched within the stores. For example, if
many of the orders received contain common items to be picked, they can be
temporarily amalgamated to eliminate multiple journeys to the same stock. The
amalgamation of Order 1 and Order 2 in the table below reduces the number of trips
to withdraw products A23 and B21 from two each to one each.
...................Order 1 .....................................................................Order 2
Product ............No of Units............................................Product ............No of Units
A23.......................4..............................................................A23......................4
B21 ......................6 .............................................................B21 .....................3
C56 ......................3 .............................................................D55 .....................2
.............................................Amalgamated Order
........................................Product ............No of Units.
.........................................A23.........................8....
.........................................B21 ........................9 ..
.........................................C56 ........................3 ..
.........................................D55 ........................2 ...
In the example, the two original orders must now be separately built up from the
marshalled, amalgamated stock of the 'amalgamated' order. A problem above with
stores is that the customer himself may be physically present, and if so will not wish to
be kept waiting a longer time than necessary, quite regardless of the efficiency of the
bunched up picking. This consideration is likely to be absent when dealing with orders
in a warehouse from external customers, since customers will have sent their orders in
remotely via a Sales Order Processing (SOP) system. Since customers are remote, the
opportunity for bunching is far greater. The 2-order procedure illustrated above for a
stores can be amended as follows: (1) collect all SOP orders over one hour; (2) bunch
and sort the orders as in the illustration above; (3) pick the marshalled stock down to
nothing, and back into the originally received SOP orders.
ii. Zonal (or Sectional) Picking
Perhaps the most common improvement to basic one-step picking efficiency is zonal
picking (the arrangement of "stock" by a supermarket is an obvious example of
zoning, making the picking into his trolley by the customer fast and efficient.) In the
stores or warehouse, to start, stock is analysed into groups such that the number of
pick requests per group are approximately equal (also taking into account items with
high pick affinities - ie different items often picked together in the same order). The
space occupied by stock in each group is next calculated. The storage area within the
stores/warehouse is next sectioned into physical zones, the space within each physical
zone being appropriate for each zonal group. Finally, each item of stock is located
within its zone according to the pick density principle previously described. When an
order comes in, the lines on it are split up and the requirements from each zone are
given to the zone section leaders for picking. The picked items are placed by the
section leaders in the marshalling area designated for the order in question. A
variation on the method that requires considerably more organisation and
coordination than seems apparent at first glance, and which is used only in large
warehouses, is to send the original order note from section to section, each section
picker picking the stock which he sees on the order is in his particular zone.
Dynamic zoning:
It is necessary in zonal picking to keep the picking demands per zone and the picking
manpower allocated to it under constant review. Locations which are included in Zone
A should be reallocated to Zone B if the picking activity increases in Zone A and
decreases in Zone B. An incidental advantage of zonal picking is that it reduces
socialising by storemen.
4.2.4 Two-Step Order Picking
An obvious and critical question in two-step picking relates to the management of the
secondary store - how are replenishment quantities, retrieved from the main store to
'top up' the secondary stores, to be determined, and how and when are the 'top ups' to
be physically accomplished. The requirements of the secondary store can be
calculated, by a variety of means, so that the material is picked on a regular periodic
basis (perhaps once a day for convenience, being sure to replenish enough so as not to
run out during the day). Calculations can be made by keeping track of works order or
customer orders through the appropriate computer system. Alternatively, it might be
practical to replenish the secondary store by a simple two-bin system - ie through a

system controlled purely visually. As for carrying out the replenishment, if economics
allow it, it is a good idea to delegate the responsibility for doing so to a particular
person or team.
4.2.5 Picking Technology I - Picker to Stock
Order picking must be seen in the total context of method, warehouse organisation,
supplies and customer activity - and the choices available of technology and materials
handling equipment. Picker to stock systems include simple equipment such as storage
drawers, gravity flow racks and bin shelving. It should be recognised, however, that
inexpensive equipment may be disproportionately expensive in terms of time and
manpower.
Pick Modules and Rollers
Boxes and pallets are trundled along a `picking tunnel'. Goods placed at one end are
trundled along until finally they are picked for despatch at the other. Two advantages
are (1) FIFO is maintained automatically, and (2) a single box or carton or pallet only
is presented to the picker at the other end. The pick module ... ie the picking area
reserved for the picker ... is thus separated from the storage replenishment activities.
Picking Vehicles ("Man Aboard")
The picker travels to the picking face on a specialised vehicle, which places him at the
correct height for picking.
Automatic Crane Retrieval
Automatic cranes are directed by computer input instructions to pick stock (say, a
complete pallet) from one or more specified locations, bring it to the human picker in
charge of the order, and return the pallet to storage. Automatic cranes are often
necessary in very high racking. In other circumstances, it is vital in such a system that
effective use is made of warehousemen's time while the crane(s) are fetching stock,
otherwise all that will have been achieved is the substitution of a fork truck or reach
truck for very expensive automation.
Radio Links and Conveyors
It may be possible to avoid fully fledged two-step picking by having pickers

permanently stationed near the stock, in communication with the order assembly
operation by radio or VDU. Stock is called for, picked at once and returned to the
marshalling area by an automatic vehicle or conveyor. Pickers at the stock in such a
system can be assigned to separate warehouse zones, to cut down their travelling time
even further.
4.2.6 Picking Technology II - Stock to Picker
Because the amount of stock in the secondary store is small and resident there for very
short periods, the emphasis here will is on highly efficient picking per se, so that
machine-driven retrieval systems are likely to be preferred. It may even be economic
to have a very simple stock layout, such as an open U arrangement on benches. (If so,
attention must be paid to separating the human pickers in the U from the fork lift
trucks and empty boxes and pallets.) Higher up the technology ladder, the techniques
applied throughout industry for such equipment as bottling lines and similar high
speed synchronised operations have also been applied to picking. The result is the
availability of fast, purpose built though expensive devices ideal for stock-to-picker
operations. Each system is designed and installed, tailored to a warehouse's individual
volumes, speeds and space. All utilise the computer to the maximum degree such as
by: (a) tracking replenishment needs by counting the stock picked; (b) printing
despatch labels and other documentation, including accounts, to accompany
despatches; and (c) making use of bar coding and radio frequency identification tags.
Many systems are capable of retrieving and delivering 3000 items per hour to the
picking face (ie to the manual pickers) from a stock of 3000 different lines. They are
major engineering undertakings fully comparable with their equipment counterparts
in manufacturing industry, and must be backed up by equivalent engineering and
maintenance support. Simpler, more easily installed equipment includes the following.
Horizontal and Vertical Carousels :
Horizontal: These can be heavy or light duty, and are often used for heavier or more
bulky objects than the traditional vertical carousel. For efficiency, one picking station
should be served by a number of the carousels ... perhaps 3 to 5 of them. These are
arranged in groups of so-called 'pods', butting on to the station. The orders are input
to the VDU console. Each carousel then rotates in turn, stopping at the trays/boxes of
each of the required objects stored on it.
Vertical: The shelving within the cabinet rotates clockwise or anti-clockwise, to

present the required tray at the picking front. The number of storage locations might
be 928 (ie 58 × 16), but with long shelves, different things can be stored on the same
shelf. They are driven by computer, and usually combined with a facility to print
customer labels and prepare accounting information including invoices. They are
good for small objects and can achieve savings per pick of up to 80%. Because of their
cost, both horizontal and vertical carousels are generally viable only for small items of
relatively low consumption. The principal problem regarding their efficiency is the
time taken for the carousel to trundle round and present the stock to the picker. For
that reason, one operator will typically have charge of two carousels, and for 35'
carousels, one operator will have charge of three carousels. Popular makes are the
well-spoken of Linvar (Leicester), Linpic (Nottingham), the Cardex Shuttle and - for
picking bottles in pharmaceuticals distribution - the Haystack. Software includes
Maximo. It has been said that it is not a carousel's inherent advantage as a medium of
storage which is of value, but the fact that it eliminates the inefficiency and travel time
associated with whatever method of storage it has replaced. In the words of Ken
Clark, manager of SLS Sears Logistics Services, Illinois, There is no way to justify the
high cost of the carousel in terms of picking the items stored in it. The justification came
from taking these items out of the area in which they were previously stocked, thus
reducing order picking travel time in that area by compressing its size.
Mini-Stacker Cranes
First marketed under the name `Supreme', the picking retrieval is made by a mini-
stacker crane under central computer control. The system is useful for more than
small objects and is popular because it creates a good working environment. Stock is
kept strictly separate from unauthorised personnel. The speed of picking is not
especially fast given the high capital cost of the equipment. Speed-up is obtained by
picking several orders together and by overlapping jobs - say, machine picking of
Orders 3 and 4 and manually load assembling of Orders 1 and 2.
Voice directed picking is a highly effective and increasingly popular technology that
has many advantages in both stores and warehouse operations. With 'voice', workers
wear a headset, earphones and a belt-attached portable computer which enable them
to hear instructions from the computer and to speak words of confirmation as to
action taken. The computer communicates with the company's Warehouse
Management System (WMS) to retrieve the locations to be picked, then the identities
and quantities of items to be picked, and transmits this information as speech to the
system. The worker proceeds to each designated location, reads out a check digit to
confirm its correctness and receives further instruction as to the identity and amount
of what is to be picked. He confirms the pick when he has actually physically picked
the material, and the system then proceeds to the next location/item. The advantages
of voice directed picking operations are that the storeman or warehouseman has his
hands and eyes free. Picking accuracy is far higher than with a paper based system,
productivity is substantially higher and accidents are reduced. For information on
voice picking, contact Vocollect or PsionTeklogix. An alternative to voice directed
picking is pick to light. With light directed picking, a small light is illuminated at each
place from which picking is to take place, speeding up the travelling process. The
system is however more expensive and less flexible than voice.
4.3 The Maintenance of Stock Records
Note that the free on-line course on Stock Records Accuracy is available at this site.
4.3.1 How The Stock Recording System Works
The stock recording system encompasses the maintenance of data records concerning
the receipt, movement, storage and withdrawal of physical stocks committed to the
stores' care. The main product and stock information is contained on a file of data, the
file usually consisting of one record for each separate product. The data record itself,
corresponding to the particular product under consideration, will consist of header
information giving, say, the product's description, unit cost, storage life etc.. It will
also consist of data of a highly dynamic nature showing the quantities of stock
currently on hand, perhaps split among such categories as free, allocated and
earmarked. The stock recording system is said to be transaction driven. That is, when
a physical event such as a receipt occurs, a corresponding data transaction is raised
with the relevant data relating to that receipt - product code, quantity, supplier code
and so on. The data transaction is processed by computer and the information on the
receipt used to update the main stock record. Besides the use of stock records in
inventory and operational systems, the records system becomes the eyes and ears of
the manager in physical stock management. Provided that sufficiently flexible means
are made available to interrogate the records, with easy-to-use on-line query facilities,
the stores or warehouse manager can 'scan his stock' each week to determine items
which are in danger of exceeding their shelf lives, spotlight slow-moving products,
report warehouse turnover and occupancy etc.. Many of the costs of stockholding such
as obsolescence can thus be largely eliminated.
4.3.2 What is Meant by 'Records Accuracy'
To estimate the accuracy of the store's records, it is necessary (1) to select randomly a
reasonable number of records (say, 50), then (2) to count the physical stock of the
actual products to which these records correspond, and then (3) to compare the
recorded quantity of each product with the quantity counted. If 100 products were to
be selected and counted, and in 81 cases the recorded quantity was the same as the
physical stock counted, the accuracy of the 100 records is 81 / 100, or 81%. That is, the
formula is:
Accuracy = Number of Records Correct / Number of Products counted
There are a number of snags in carrying out the above, one of them related to the
complex matter of the reconciliation of the record and the actual count (see below).
However, for many stores, a further question is whether the record and the physical
stock must match exactly for the record to be considered correct, or whether a degree
of "tolerance" is allowed between the two figures such that the record is still
considered to be correct despite the difference.
Although there are very many products which can and should be counted exactly -
large, expensive structures, for example - there are many others which simply cannot
be counted exactly. Bulk liquids are difficult to measure. Some items such as yarn,
counted by weight, have a weight heavily affected by humidity. And some items are
extremely cheap and numerous, and seem not to be worth the expense that would be
necessary to count them accurately - some small electronic components, for example.
Although a tolerance might be assigned to every item separately, this would

burdensome and contrary to commonsense. Instead, before estimating records
accuracy, the stores controller should first assign every item to one or other of a
limited number of "tolerance classes". Examples of tolerance classes are 0%, 2% and
5%. Then, when comparing the stock record with the actual count, the tolerance
percentage of the product must be allowed for. For example, suppose Product P had a
tolerance of 2%, and there were 500 units on the record. 2% of 500 is 10 units.
Consequently, if the physical stock is anywhere between 490 and 510, the record is
declared correct. For example, if the count is 508, the record is correct, and if it is 511,
the record is wrong.
4.3.3 Improving the Stock Records 'System''
The views of attendees on GMCS's now discontinued course on Stock Records

Accuracy over many years as to the causes of stock errors in their own companies are
summarised in the table below
1. Incorrect Counting .............................................. 11.8%
2. Missing Transactions ............................................. 9.0%
3. Insecure Stores .................................................... 8.6%
4. Incorrect Recording .............................................. 8.1%
5. Incorrect Picking (ie wrong item) ........................... 6.9%
6. Stock placed in Wrong Location .............................. 6.6%
7. BOM and/or Backflushing Errors ............................ 5.6%
8. Slow Reporting of Transactions .............................. 4.8%
9. Errors introduced by the Annual Stock Count ........... 4.3%
10= Working under too much Pressure ....................... 4.1%
10= Misidentification of Parts ..................................... 4.1%
12. Data Keying Errors ............................................... 4.0%
13. Scrap or Production missed ................................... 3.9%
14. Use of the Wrong Transaction ................................ 3.1%
15. Wilful lack of Care ................................................. 3.0%
16. Units of Measure ................................................... 2.8%
17. Duplicates (ie same transaction submitted twice) .... 2.1%
18. Misidentification of Locations ................................. 2.1%
19. Failure to count Raw Material Receipts .................... 1.9%
20. Shrinkage (unreported deterioration/write offs) ..... 1.6%
21. Incorrect Picking List issued ................................... 1.1%
22. Theft ..................................................................... 0.8%
23. IT/System faults .................................................... 0.1%
It can be seen from this that the top five causes out of 23 account for an incidence of
44 error occurrences out of 100. The causes of error to attack first are therefore these
five ... basically to do with (1) counting, (2) locating, and (3) the management of
transactions. After identifying the prevalent causes, the stores manager must set to
work to change the recording system, perhaps by providing new technology, by
providing more effective training or by whatever other means are necessary to
eliminate or alleviate the causes and put matters right. In other words, the problem
and the solution to it are not in the hands of staff; they are in the hands of
management.
4.3.4 Controlled Stores Access
If the Stores Manager and his staff are to be accountable for the accuracy of the stock
records and the integrity of the material in their charge, it is essential that they
maintain full control at all times over stock issues and receipts. In short: the stores
must be physically secured and manned at all times, and must be strictly out-of-
bounds to non-stores staff. The closed store may present a problem in factories which
have multiple product locations (with materials placed near to their points of use).
Although the cost of re-laying out the factory can be high to achieve controlled access,
it is a prerequisite to the achievement of inventory records accuracy. One of these
costs clearly is the need to man the entry to the stores. Although the principle of a
fully-closed store must not be violated, there are a number of ways to mitigate the cost
and possible inconvenience, such as by introducing imprest and bulk issues previously
mentioned. In the last analysis, however, this is a matter where it may be necessary to
bite the bullet. A storeman must man the gate to the store.
4.4 Cycle Counting
Note: this subject is covered at considerable length in the free on-line course on
Stock Records Accuracy at this site. Go to Cycle Counting Agenda or Cycle Counting
text.
Despite our best endeavours, it seems inevitable that the computer records for the stock of a few products will
deviate from the actual physical quantities of the material present. This is especially likely to occur if the
material is subject to a large number of transactions ... ie many receipts and many issues. And because of it, it
is periodically necessary to count the stock and correct the computer records where they differ.
In the past, this process has been combined with the financial and legal requirement to account for the value
of the stock at the company's year-end, stock being a major asset in the book of accounts as explained below.
When all the stock is counted at the year-end for this purpose, the activity is referred to as the annual
stockcheck or the annual audit. It is a disruptive and error-prone time, involving weekend working and
hapless helpers drafted in from other departments.
A more natural, more efficient and far less disruptive way of checking physical stock against the record is by
way of a programme of cycle counting. Cycle counting means choosing and counting a number of products
day-after-day or week-after-week until eventually they have all been counted. When they have all been so
counted, the process starts all over again. The length of time to count the stock and start again is the 'cycle'. If
a company counted its stock three days a week such that it was all counted by the end of six months, and then
started again, this would be a six month cycle. Indeed, a company might well count certain of its products
(say, the 10% with the most transaction) over a one month cycle and others (say, the 30% with the fewest
transactions) over a much longer cycle (perhaps, six-monthly). Three issues which must be decided before
commencing a cycle counting programme are: (1) what the cycle length is to be (or what the different lengths
are to be, if the products are to be split into different counting groups); (2) what is to be the rota of counting
within a cycle; and (3) how records of actual counts are to be maintained and published. These questions are
lengthy ones answered in full in the Stock Records course referred to above.
4.5 The Financial Control of Stock
4.5.1 The Custodianship of Assets
As previously stated, the role of the storeman is to provide a service to the production,
purchasing and distribution functions, and to receive, store and issue just that amount
of stock in a timely way that is determined by the planning and other systems which
they employ. The storeman or warehouseman therefore takes the accountant's view -
that stock is a valuable asset (under his direct control). The company has paid money
to suppliers or indirectly through the production process to acquire it, and expects in
time to put it to further use or to sell it. In short, it is what is known as a current asset.
A major company accounting document required by law and good practice, to be
prepared at the end of each financial year, is the balance sheet. This is a snapshot at
that moment in time of what the company owns (its assets) and what it owes (its
liabilities). The assets themselves are placed in one of two classifications, fixed assets
and current assets. Examples of fixed assets are land and buildings, machinery, and
fixtures and fittings. Current assets are those which either are cash, or are expected to
become cash in the near future. They include cash at the bank, stock and debtors (ie
companies that owe us money, usually being customers who have not yet settled their
bills).
The reason that stock in the stores is taken to be a current asset is that it is regarded
as an investment waiting to be sold. That is, when the company manufactures the
items on its sales range, in effect it is investing money in the production so that it will
have the stock available to sell. When the sale has been made, the company no longer
owns this investment - instead, it has revenue from the sale.
The stock in the stores is valued at its cost price. A cost price for every item is
calculated by the accountant based on the costs incurred in the production process -
raw materials purchased, electricity expenses and factory operators' wages, for
example. Note that work that is partially completed, basic components, sub-assemblies
and work in progress are also valued at their cost prices. In these cases, although the
material could not be sold to a customer, the items still represent investments, in these
cases, waiting to proceed to the next stages of the manufacturing process.
4.5.2 Financial Reporting
There is a requirement to record carefully any discrepancy between the stock record
and a physical count. Discrepancies and the formal reporting of them in financial
terms are clearly important matters. A company which fails to keep close control over
stock jeopardises its own continued existence as a solvent, on-going concern. If the
stores or warehouse has a large range of different items, it is unlikely to be best to
show a list of stock losses and gains individually. Instead, it will be more helpful to
summarise them in groups of similar items. In effect, each group is an account. (The
familiar term accountancy means the management of the company's books of
accounts.) Consider two groups, or accounts, (a) copper tubing, and (b) rubber
components, and the discrepancies that might be revealed one time from counting the
items of copper tubing items and the rubber component items:
Account Name .............Total Value of .......................Total Value of ..............Net Value.................Net Value of
..........................................all Surpluses ......................all Deficiencies .............of Surpluses ...........Deficiencies
Copper Tubing .......................£10 .............................................£2 .................................£8
Rubber Components ..............£17 ...........................................£20 .....................................................................£3
Suppose now that prior to the production of these reports of the net (ie total) surpluses
and net deficiencies, the previous value of copper tubing we believed we held was
£1000 and the value of rubber components was £700. We can now post two financial
transactions to these accounts as shown in the final table below.
Copper Tubing Account ........................£1000 ......................................Rubber Components Account ...........£700
Stock Surplus .............................................£8............................................Stock Deficiency ...................................£3
Revised Value of A/C ..............................£1008.........................................Revised Value of A/C .......................£697
4.5.3 Managing Stock Losses
When it comes to the re-evaluation of stock for various reasons such as its spoilage or
damage, the views as to cause and cure are required of many staff in the company
including the accountant, the production and purchasing managers, the marketing
manager and, of course, the stores manager himself. Categories of stock other than 'fit
for purpose' will be different for each company, depending on the nature of its
business, but might include: obsolescent (the material is going out of use but is not yet
unusable); obsolete (the material will never be needed again); deteriorated (the reason
for the deterioration should be recorded - storage conditions, damage, excess length of
stay etc..); and slow moving. In purely financial terms, stock gains and losses may be
reported to senior management in the above terms say, every 6 months. However, the
stores manager will wish to review stock in this way far more frequently than that -
say, every month. The review will take the form of a VDU query or printed report,
and enable him to identify material at risk ... for example, material moving into the
danger zones of excessive duration on the shelf. In other words, the idea is to look at
things and take action before they become problems.
4.6 Transaction, or Audit Trails
4.6.1 Defining a Transaction Trail
When the stores manager accesses the computer record for a given
product in his charge, the information he sees on the VDU is of a 'static'
nature. He sees a snapshot. In order for him to appreciate the succession
of events which have taken place ... the receipts into stock, the stock
movements, the picks, the despatches ... it is necessary for him to see a trail
of the data transactions. A transaction trail or audit trail is a display of the
transactions which have been raised and submitted to the stock recording
system and which have successively brought the record to its current state.
For example, suppose that at the beginning of the morning according to
the record there were 500 heavy duty batteries in stock. Later, at 10.00am,
a system transaction is submitted and processed for a receipt of 150
batteries from the supplier. Shortly after this again, at 10.30am, a further
transaction is processed for 90 units issued to the shop floor. The record
now says that there are 560 heavy duty batteries (500 + 150 - 90). This
example is illustrated below. Note that the successive stock quantities on
the record show the 'before' and 'after' record amounts (ie before the
transaction was applied and after it). Note also that the order in which
transactions are displayed is from bottom to top. This is so that
increasingly old transactions can be seen by "scrolling" round the bottom
of the screen. In the example below, the times the data transactions were
input are given, as recorded by the computer clock.
Audit Trail Report
31st October........................Product: Heavy Duty Batteries ...................Record..560 units
Time ..............................................Trans. Quantity.........................................................Stock Before.....................Record After
10.30am....................(Issue to Shop) .......90 .............................................................................650.........................................560
10.00am ...................(Receipt from Supplier ....150 ...............................................................500 ........................................650
The stock record system should provide the ability to display the audit
trail of any product on the VDU at any time. The maximum number of
(increasingly old) transactions capable of being retrieved will be clearly
governed by what is on the computer disk. It may be necessary to page
back through several VDU screens to see them all. Except in automated
warehouses, the times at which transactions are input to the system will
not correspond to the times at which the physical events they describe
actually occurred. The submission of the transactions will be later by
seconds, minutes or hours. In fact, in batch systems, it is possible for the
transactions to be input in a different order to the order of the real events.
In the example above, if the storesman had been unable to submit the
receipt transaction until 11.00am, even though the actual delivery was
made much earlier, the audit trail would read as below instead:
Audit Trail Report
31st October........................Product: Heavy Duty Batteries ...................Record..560 units
Time ..............................................Trans. Quantity.........................................................Stock Before.....................Record After
11.00am....................(Receipt from Supplier ........150 ...........................................................410........................................560
10.30am ...................(Issue to Shop ...........................90 ...........................................................500 .......................................410
It can be seen that the the stock record at one point above was 410 units,
even though we know there never were that number of units present. The
investigation of out-of-order or missing transactions and known or
apparent discrepancies between the "real world" and the stock records to
establish the true position is referred to as "reconciliation".
4.6.2 The Reconciliation of a Stock Count
One reason that the storeman may wish to investigate a transaction trail is
the stores' concern with the reconciliation of a physical stock count and
the stock record held on the computer. Because the chronological order in
which the transactions are posted to the stock recording system is not
necessarily the order in which the physical events to which they relate take
place, or because transactions may be missing or late, or for some other

reason, it is not possible simply to substitute the physical count figure for
the current stock figure unless the stock is closed off from picking and
putting away well before the cycle count, as described below. In all cases,
if the stock has not been closed off, even when the count figure and the
stock record figure agree, it would be necessary to investigate the
transaction trail, looking for out-of-order and late transactions, before
either making an adjustment or verifying the record as being correct. An
example of the effect of a late transaction on an attempt to reconcile a
stock count is given below. In the example, suppose that a number of
events occur relating to a part P from 3.00pm to 4.00pm. The first figure
below represents the physical stock quantities involved, in particular the
changes in stock level following a receipt and an issue. It can be seen that
the third 'event' to occur is the carrying out of a cycle count at 3.40pm,
which duly records a stock quantity of 1200 units. In this example and in
the ones following, the transaction trail should be read from top to bottom.
Figure 1 - Representation of 'Events' (Physical Stock)
Time ..............................................Description of Event.................................................... Quantity.......................Physical Stock in Store
3.00pm....................(Starting Stock Quantity) ................................................................................................................................................1000
3.15pm ................... Receipt from Supplier .......................................................................................500 ........................................................1500
3.35pm..............Issue to Shop .........................................................................................................300..........................................................1200
3.40pm ..................Carrying out of Cycle Count.............................................................................1200..........................................................1200
The next figure shows the stock record of Part P and the data transactions
raised and submitted in response to the events depicted in Figure 1 above.
It is assumed that the stock record is correct at 3.00pm. The cycle count
value is submitted as a transaction at 3.50pm.At the time the cycle count
transaction is received, however, the Issue to the Shop transaction of 300
units which occurred at 3.35pm has not yet been submitted to the system.
It is late. It can be seen in Figure 2 that it is not finally submitted until
4.00pm. Figure 2 : Data Transactions relating to Figure1 (previous page)
Figure 2 - The Stock Record and Data Transactions
Time ..............................................Description of Data Transaction..................................................Trans. Value.....................Stock Record
3.00pm....................(Starting Stock Record) .................................................................................................................................................................1000
3.20pm ................. Receipt from Supplier Trans...................................................................................................500 .................................................1500
3.50pm..............Submission of Cycle Count ....................................................................................................1200..................................................1200
4.00pm ..................Issue to Shop Trans................................................................................................................... 300....................................................900
Because of the lateness of the submission and processing of the Issue to the
Shop transaction of 300 units at 4.00pm, if a comparison is made at
3.50pm between the cycle count value of 1200 units and the stock record of
1500 units at that time, it will appear that the record is in error by a 300
units excess. When the cycle count transaction then changes the stock
record to 1200 units at 3.50pm, the late transaction, when it arrives,
further changes the record to 900 units and makes it wrong.
In order to be able to reconcile the cycle count with the record, it is

necessary to close off the stock physically from further picking or putting
away before the count takes place, and keep it closed off until the
reconciliation. By closing off the stock, the possibility of late transactions is
eliminated - there are no physical events taking place, so there will be no
late transactions! For example, suppose above that the stock is closed off
at 3.30pm, and remains closed off for an hour, until 4.30pm, to give time
for all late transactions to get through the system. As before, the cycle
count takes place at 3.40pm, and the reconciliation takes place at 3.50pm.
The Issue to the Shop of 300 units physically occurs at 4.35pm, and the
transaction relating to it is submitted at 4.40pm. The physical situation is
illustrated in Figure 3 below, and the record is shown in Figure 4, also
below.
Figure 3 - Representation of 'Events' (Physical Stock)
Time ..............................................Description of Event.....................................................Event Quantity.....................Physical Stock in Store
3.00pm....................(Starting Stock Quantity) ................................................................................................................................................1000
3.15pm ................... Receipt from Supplier .......................................................................................500 ........................................................1500
3.30pm ....................CLOSE OFF STOCK .........................................................................................................................................................1500
3.40pm .....................Carrying Out Cycle Count...............................................................................1500.......................................................1500
3.50pm .....................Reconcile Stock Record.....................................................................................................................................................1500
4.30pm.......................RELEASE STOCK...............................................................................................................................................................1500
4.35pm .....................Issue to Shop ..........................................................................................................300.........................................................1200
Figure 4 - Stock Record and Data Transactions
Time .......................................................................Description of Data Transaction.............................................Trans. Value..................... Stock Record
3.00pm....................(Starting Stock Record) .................................................................................................................................................................1000
3.20pm ................... Receipt from Supplier Trans. ..........................................................................................................500 .....................................1500
3.30pm ....................CLOSE OFF STOCK ......................................................................................................................................................................1500
3.40pm .....................Carrying Out Cycle Count..............................................................................................................1500......................................1500
3.50pm .....................Reconcile Stock Record...................................................................................................................1500.....................................1500
4.30pm.......................RELEASE STOCK...........................................................................................................................................................................1500
4.40pm .....................Issue to Shop Transaction.................................................................................................................300........................................1200
Note that the subject of reconciliation and the role of software is dealt
with in greater depth in the Stock Records Course at this site. Visit
Section 4.4 of that course.
5. Human Resources
5.1 Recruitment and Selection
5.1.1 Staff Recruitment
Recruitment is defined here as the process of eliciting applications from personnel to

work in the stores or warehouse, not the final selection and appointment of a
successful candidate. There are two issues which the HR manager may wish to
consider regarding recruitment. Firstly, it is common for the company to advertise a
stores job internally, perhaps because it is inexpensive to do so, or perhaps because it
is known that a shop floor operator would know the company's ways of working and
so require little training. One must question, however, whether internal appointments
are as effective as those resulting from external advertising seeking recruits with deep
stores' knowledge and long stores experience. Secondly, in order to advertise the post,
it is necessary to define its duties and wage rate. It is common here for HR to grade a
stores job by a simple classification scheme. That is, the question is asked as to what
other jobs it seems to be like. Consequently, what is missed in doing this is that part of
the job related to record keeping, required meticulousness and other unique,
necessary qualities - not least, the need for willing assumption of responsibility for a
large financial investment in stock. It is highly desirable, therefore, that remuneration
and grading of the stores job should be achieved through application of a so-called
"point factor" system such as the Hay scheme.
A point factor scheme is a quantitative job evaluation methodology. A point-factor job

evaluation system is a thorough means of analysing a job from first principles, and
identifying the various factors which constitute it and which must be dealt with in its
performance. After analysis, the various factors and the degrees to which they apply
in the actual conduct of the job by a job holder are "weighted" numerically. Note that
the weights to be applied are decided by discussion, and their magnitude will be
determined in part at least by how management views the difficulties and importance
of the challenges facing the company. 'Factors' might include: problem solving ability;
willingness to assume responsibility; and ability to plan and coordinate. The points, or
weights, assigned to factors will be graded according to the need for the factor in
actually carrying out the job (semi-routine problem; generally defined problem;
abstractly defined ... etc). As mentioned, the Hay System is a very well-known point-
factor job evaluation procedure By employing a point factor scheme, stores/warehouse
job qualities relating to the need for clerical aptitude and acceptance of financial
responsibility will be brought out. The job is likely to be placed in a higher grade than
at present as a consequence.
Return to Agenda Return to top of Agenda Go to Top of Course Go to end
5.1.2 Staff Selection
Two aspects of staff selection are testing and interviewing. Dealing first with testing the
job applicant, two qualities needed of a recruit are a practical nature and
clerical/numeracy attributes (combined with good eyesight). Practicality is self-
evidently needed of the storesman or warehouseman in materials handling and
reacting to unexpected events (see Section 2). Numeracy is needed in the requirement
to support the computer input and output side of the job. These include completing
and submitting stock data transactions and the ability (say) to use computer put-away
software. So the first thing to test might be the job applicant's eyesight and colour
vision. After this, a simple numeric test might be given. [One test administered by a
company is to give each applicant a sheet of paper on which is printed a list of, say, 30
product codes. The candidate is required to copy the codes onto a second sheet of
paper! Not too many applicants can do so correctly.]
As for interviewing the candidates for the job, the first requirement is that the process
should be well organised purely from the viewpoint of personal arrangements. The
WASP procedure has been suggested, as follows: W: Welcome ... Putting the candidate
at ease and explaining the interview purpose; A: Acquiring .... Acquiring knowledge,
perhaps by going through the candidate's work experience in (reverse?) chronological
order; S: Supplying ..... Supplying information in answer to the candidate's questions;
P: Parting ..... Explaining what happens next, and in what timescale.
5.1.3 The Job Offer
First, it should be noted that the contract of employment begins when the successful
candidate accepts the company's offer, not when he starts actual work - a contract of
service is but an example of contracts in general, so that the general law of contract will
be applicable. Also note that the company may make the job offer subject to the
receipt of "satisfactory references". If so, the prospective employee should beware
that satisfactoriness is entirely a matter subjective to the prospective employer, and
also that a referee is under no obligation to provide a reference. If the job offer is
made orally, the employer has a statutory duty under the Employment Rights Act
1996 to send the new employee a "written statement" within two months setting out
such details of the employment as pay, hours of work, place of work, job title and so
forth. The company should take particular care in framing conditions relating to place
of work, hours and duties: these should be drawn up widely if it wishes to preserve
flexibility in its deployment of labour. Also a part of the contract are implied terms.
For the employer, they are the duty to act in good faith and others including those
relating to health and safety, and, for the employee, duties of fidelity, obedience and to
act with reasonable care and skill.
5.2 Industrial Relations in the Stores
5.2.1 Grievances
If a solution to a dispute cannot be found, or if a disciplinary matter cannot be

resolved, the two sides may turn to conciliation, mediation or arbitration and the
services of a third party to break the deadlock. Industrial experts ready to take on the
task are to be found at the Government's Advisory, Conciliation and Arbitration Service
(ACAS, phone 08458-500501 for free advice). The role of the third party in
conciliation is simply that of facilitator. In mediation, he will put forward specific
recommendations. If employer and employee have agreed to arbitration, the third
party will prescribe a solution which the parties have agreed in advance they will
accept.
In the event of a dispute, and failing negotiation conducted through standard

procedures, the employee, in concert with others, may engage in industrial action to
further his case. Examples of industrial action are: go-slows, working to rule, overtime
bans and strikes. Any one of these actions, if taken, would constitute a breach of
contract by the employee, the first three being failures in his contractual duty of
fidelity, the last a fundamental breach. Furthermore, either the employee, if the action
is 'unofficial', or the union or staff association, if it is 'official', unless statutory
immunity from legal action applies, as described below, would be liable to action in
law for a claim in tort, the principle torts applying being those of contract interference
and inducing a breach of contract. A tort is a "civil wrong" - that is, it is an action
taken by one person that harms another. For example, if Person A drops a hammer
that accidentally lands on the foot of Person B, injuring him, Person A has committed
the tort of negligence, and can sue for damages in the court. Torts are part of common
law. (For example, there is no statute law forbidding people negligently to drop
hammers on other people's feet.)
5.2.2 Breach of Contract
The company is entitled to dismiss employees on strike without notice for breach of
contract. (There is no law which "permits" a person to break a contract of
employment.) If the strike is unofficial, the strikers are considered to be acting as
individuals. They have no right of appeal for unfair dismissal to an Employment
Appeal Tribunal, since a tribunal has no jurisdiction over matters of contract. If the
strike is official (ie if it is endorsed by a union or staff association), and all strikers are
dismissed en bloc, they also have no right of appeal for the same reason. However, an
appeal can be made if dismissals are selective. Since the dismissed employees have
been treated differently from those not dismissed, the grounds of the appeal would be
that there has been unfairness - that is, that the employer must have had hidden
motives for his action that related to them but did not relate to others.
Statutory immunity from liability for certain torts, including those relating to contract
above, is given under the Trade Union and Labour Relations (Consolidation) Act,
1992. In order for the Act to apply, however, certain conditions must be met. First, the
dispute must indeed be in contemplation or furtherance of a trade dispute. Secondly,
there must be a yes/no ballot of union or staff association members for the action
proposed, with a simple majority in favour. Thirdly, the industrial action must be
confined to a dispute directly affecting the employees balloted, at their place of work.
That is, those involved in secondary action in support of other employees involved in a
dispute elsewhere are not immune from liability.
5.2.3 Discipline
Discipline by the employer may be reinforced by: a formal caution; a warning (or final
warning); demotion; or suspension for a period from the company (with pay).
However, the manager whose member of staff is the subject of the disciplinary
proceedings may believe it to be strongly in the interests of his store or warehouse,
and those of the company, that the employee be dismissed. If so, he must co-operate
closely with the HR manager. For one thing, dismissal other than for breach of
contract dealt with above, is hemmed about by legal obligations and restrictions. As
well as for reasons of ethics, there is a need for the company to avoid unfair dismissal
because of the Employment Protection (Consolidation) Act, 1978. Note that this Act
defines fairness, rather than unfairness, so that in any case before a tribunal, there is a
burden of proof on the employer to establish that there was a fair reason for the
dismissal, as defined under one or other of the six headings set out below. It is also
necessary at a tribunal to show that the dismissal was "reasonable". Facets of
reasonableness are that the severity of the action taken was matched by the
seriousness of the offence; that the action was consistent with action previously taken
against other employees in similar circumstances; and, most importantly, that fair
disciplinary procedures, such as the issuance of written warnings and the granting of
an opportunity for an employee to state his/her case, had been put in place and were
scrupulously followed.(Failure by the employer to follow procedure in every
particular is a major cause of tribunal findings of unfair dismissal.) The allowed
reasons for dismissal under the Act are:
1. Lack of capability or qualifications.
The principle two reasons in practice are inherent

incompetence and ill-health necessitating long-term absence
from work.
2. Misconduct.
Examples of misconduct are disobedience; serious negligence;

a wilful failure to take prescribed safety precautions; damage
to the company's commercial interests; falsification of records;
drunkenness; and violence.
3. Redundancy.
Dismissal attributable to actual or intended cessation of

business or to an actual or expected reduction of the work
carried out by the employee.
4. Statutory disqualification.
The employee cannot perform his duties without contravening

the law. Usually, this means a driver losing his licence and
being unable to drive.
5. Some other substantial reason.
The principal application of "SOSR" arises when the

employer is forced for valid business or financial reasons to
reorganise the company's operations and, to do so, must
unilaterally change the terms and conditions of contract of
employees. Employees not agreeing to the revised conditions
may be dismissed for SOSR.
5.3 Fire Precautions
Fire is an ever present worry for the stores or warehouse supervisor. Fires are devastating to the operation of
the business: they often result in loss of market share; and the incurrence of huge expense in terms of loss of
stock and damage to the building itself. It is reported from insurance companies that warehouse stock losses
(including stock made unsaleable by fire) account for 20% of the financial value of all industrial claims. Loss
of warehouse buildings and property accounts for a further 10%.
The ferocity of fire in warehouses can be judged from reported statistics. Thus even fires involving non-
combustible materials such as metal parts can create air temperatures at ceiling height in excess of 650 C if
such materials are packed in cardboard or crates, or are surrounded by foam protection. Fires involving
combustible materials may produce ceiling air temperatures over 1100 C. At this heat, non-combustible
building materials will fail. Steel, for example, is structurally damaged by heat over 600 C and steel supports
exposed to the higher temperature for 10 or 20 minutes will collapse (no-one will forget the horror of the
collapse of the Twin Towers.) Even when steel reinforced concrete buildings survive, the cost of
reconstruction and renewal may exceed 50% of the original cost of the building.
Protection against fire must consequently be a high company commitment and well-known as an article of
company policy. Management must put in place fire protection and control systems, assign responsibility for
them and ensure those responsibilities are properly carried out. The means to avoid fire or mitigate its effect
through the use of non-combustible materials and the installation of effective alarms. Sprinkler systems must
be installed. The required action can be considered under five headings as follows.
(i) The Basic Fire System
The warehouse's basic precautions must be put in place and the work done to draw up
the initial fire regulations. The Warehouse will not receive a fire certificate from the
fire authorities until these activities have been performed. Advice may be obtained
from The Fire Protection Association.
(ii) Fire Regulations
The warehouse's fire regulations cover the precautions to be obeyed to avoid a fire
and the actions to be taken if a fire occurs. The regulations should be simple and to
the point, they must be published and they must be prominently displayed at a
number of sites. The principle regulations issued by government are The Fire
Precautions (Workplace) Regulations 1997 and The Fire Precautions (Workplace)
(Amendment) Regulations 1999. These are pblished at www.hse.gov.uk.
(iii) Fire Drills
All staff must be regularly trained in fire drills, with (say) two drills per year. Drills
include correct assembly at the designated assembly points. Staff must understand the
purpose and procedure of the 'reporting hierarchy' whereby the senior person at the
assembly point accounts for all persons who were on site to ensure no-one is missing.
The speed and efficiency of fire evacuations must be recorded by the manager so that
progress in efficiency can be tracked.
(iv) The Containment of Fire
Fire walls and regulatory escape routes should also be provided, as should flame and
smoke detectors wired to an audio alarm system. It is essential that plentiful supplies
of water are available at all the required points for fire fighting by the fire brigade
and for the service of automatic fire sprinklers. It is stated by fire insurance experts
that the installation of effective automatic fire sprinklers will reduce loss eight fold. A
well-designed automatic sprinkler system can control or extinguish a fire, preventing
it from spreading by dousing adjacent areas and preventing it also from causing
structural damage by cooling steelwork. Sprinklers are permanently on guard and
will function, despite smoke and heat, under conditions which prevent effective fire
fighting by the brigade - in narrow aisles and at ceiling height, for example. Automatic
sprinklers operate from the moment a fire begins and water damage to stock is
confined to the area in which the fire breaks out.
(v) Fire Fighting Apparatus
The manager is responsible for ensuring that there is sufficient fire-fighting apparatus
at the designated fire points. (Fire points should be clearly sign-posted and mentioned
in the regulations.) The apparatus including the audible alarm system mentioned in
(iv) above must be regularly tested. Staff should receive training and annual update
training in the use of the apparatus.
5.4 Security
The stores/warehouse should be of substantial construction, with windows capable of being locked, so as to be
capable of resistance to forced entry. It should be laid out with a minimum number of access points to
buildings, perhaps by reducing the number of extra doors which have been provided as amenities simply to
cut staff walking time. Staff access should be arranged so that they are "covered" by formal reception areas.
Goods arrival and removal doors should similarly be covered if possible by supervision. Entry to the stores
must be restricted to those with the express permission of the stores supervisor. A good system should be in
place with regard to keys, with no duplicates allowed. (A system of computer controlled electronic keys can be
installed with separate security passes for personnel whose jobs require access.)
Theft in the UK each year from stores and warehouses and from vehicles in transit
occurs on a grand scale. It is a duty of the stores manager to take actions which
will reduce these losses and the costs associated with them. The organisation and
layout of the stores must take account of security from the beginning. The set- up
of routines is very much more difficult and less sure of success if the basic
requirements have not been built in.
Naturally, a major point in the provision of security is the installation of alarms. Often, however, the alarm
system is poorly matched to the premises and the environment in which it must operate. This can then be
compounded by inadequate training of guards and staff (the majority of false alarms occur at the start and
finish of shifts, when the system is being switched on/off). The police will downgrade their response to an
alarm if there are more than two false alarms in a year. Modern alarm equipment can now incorporate
verification analysis ... for example, is an external alarm signal then shortly followed by an internal alarm
signal...? Equipment can also be fitted with an analysis of the type of intruder (a cat or a man ..?) and the
precise location of the intrusion. Other security points include:
(i) the locking up of pilferable items in separate enclosures and strongrooms;
(ii) the provision of external floodlighting; and
(iii) the installation of closed circuit TV to cover all entrances and walls.
Internal Theft - Summary
The profile of the internal thief employed in the stores varies from the employee who believes taking office
supplies and commonly available materials to be not really stealing and, anyway, a perk of the job, to the
professional thief who will potentially steal large amounts of inventory and who may be working with others
outside the stores or factory. Internal theft is effected by a variety of means - from putting goods in the pocket
or in a satchel or briefcase, putting goods outside a little used door for later collection, putting material in
recycling or refuse containers for later collection, all the way to making arrangements with drivers and
conspirators in customers' factories or using the stock system and deleting records of transactions. As well, IT
precautions should be taken to prevent entries in the stock records transaction file from being deleted.
(Individual transactions should never be permanently deleted from the transaction trail file. If, for any
reason, a transaction must be deleted for IT reasons, a copy of the deleted record should be retained as a
'dummy'. )
Perhaps the most important factor in the control of theft is the ethical stance adopted by the company and its
senior managers. If employees see evidence of dishonest practice at the highest level, they will not be held
back on moral grounds from dishonesty in their own jobs. Other than that most important point, theft can be
controlled by the following means.
1. as stated above, maintaining limited access to the stock. And if a storeman is not in
his own work area, should he really be there?
2. Institute high levels of stock records accuracy, and adopt the policy that material
"cannot be stored, moved, despatched, consumed or produced without supporting
documentation".
3. The supervisor must know what is going on in his own stores. He should walk about
and question people not doing what they are supposed to be doing or not in the place
expected of them. For example, he must query material staged without proper
documentation.
4. Managers should keep a watch for tell-tale signs that theft is taking place. These
include - figures changed on order documentation; missing documents; authorisation
stamps missing; stock records inaccuracy (*); unusual markings on packages; partly
opened packages; window guards with missing screws; products or picking slips
discovered in rubbish skips; employees making frequent trips to the car park during work
hours; drivers loading their own vehicles; little used or emergency doors have cardboard
wedged in their locks. (* It is not enough merely to check stock records for accuracy. A
record may be kept accurate through false transactions. Consequently, the audit trails
of certain records should be scutinised by auditors to ensure that recorded
transactions are genuine.)
Since March 2006 it has been illegal for any person to work as a 3rd party security guard without an SIA
licence (Security Industry Authority). There are two types of licence - Frontline (for guards) and Non-
Frontline (for managers). Nevertheless, the company engaging the services of a security provider should vet
the firm carefully and additionally vet each guard individually to ensure he has the necessary experience,
training and 'stability', notwithstanding his possession of a licence. Smart, polite guards or a licence do not
guarantee integrity. In some companies, there is a 300% staff turnover and management control (from an HQ
a hundred miles away) is poor. Finally, let it be said that the outsourcing of security or the employment of a
security company does not release company management from its liabilities and obligations under the law ...
the duty of care to provide security to both a company's employees and its property. For that reason, and to
assess effectiveness in this difficult field, it is recommended that the company arrange for an external audit of
its actual security - ie the services of a company that will physically test its procedures with a surprise visit by
personnel attempting to gain entrance. An organisation providing on-site audits is The Security Watchdog, of
Liphook, Hampshire.
Severe problems arise when material is committed to transit. In selecting third party hauliers, therefore,
considerable attention must be paid to the standards and procedures of the haulier in the matter of security.
The modes of transport suffering the fewest losses are aircraft and rail, the first because of excellent
procedures and safeguards followed by airlines and airports, the second because the nature of the loads make
them unattractive to thieves. Road is the problem. Driver training by a specialist company is essential. Stores
staff themselves should always be responsible for sealing and unsealing vehicles, not external drivers. Besides
the use of seals, vehicles themselves are secured by slam locks, deadlocks, brace locks and immobilisers. In
addition, and more and more popular, is the deployment of a vehicle tracking system for vehicle recovery.
There are two types of system. The first operates by a GPS (ie global positioning satellite), capable of tracking
the vehicle to about 30 yards. GPS Systems have an advantage that unauthorised detours and stops by drivers
themselves can be detected. On the downside, the signal from these devices can be jammed. The second type is
based on a terrestrial signal, emitted from the device in the vehicle and which cannot be completely jammed.
The theft can be detected when it occurs, not simply when the driver reports it. Two systems in the UK are
TrakBak and Tracker.
5.5 Pests in Stores and Warehouses
In a warehouse, you are never more than five yards from a rat. The incidence of pests in the stores and
warehouse should be monitored by the maintenance of a Pest Book, with records kept of all so-called "visits"
by new pests or all discoveries of pest colonies. The information to be recorded should be date and time,
location and a sketch of the creatures. The book will be needed by the firm brought in to deal with them, and,
perhaps, by the Health and Safety Executive. Stores and warehouse pests include rats, silver fish, firebrats,
cockroaches, the warehouse moth, the Indian meal moth, tropical warehouse moth and house moth. Beetles
include the biscuit beetle and flour beetle. Also, there are the Australian spider, wasps and flies, mites, mice
and rats, feral pigeons and starlings.
5.6 Health and Safety in the Stores
5.6.1 Personal Responsibilty
While the need for uncompromising support for health and safety by the company can
hardly be overemphasised, responsibility at the practical level must clearly lie with the
storeman himself and with the stores supervisor. There is also a role for the human
resources manager, although it is likely to be administrative, especially regarding
formal compliance with regulations. For one thing, The Health & Safety at Work Act,
1974, described below, lays down in general terms the duties of the employer with
regard to the health, safety and welfare of his employees. In addition, one requirement
is that the company should issue a written statement of its policy, and also lay down
the duties of the employee regarding his own self-care and a requirement for his
cooperation with the company these matters.
As well as practical training, especially in the safe handling of materials and

equipment dealt with in Section 2, the storeman must know the meaning of hazard
signs and warnings. He is required to move a wide variety of often unfamiliar
materials, and possibly new ones every day. Warning signs are there to protect him.
There are many hundreds of signs, some familiar to everyone in industry, others not.
5.6.2 Criminal Liability
Eight major statutes relating to health and safety in employment were enacted
between 1833 and 1963, the last four being The Mines and Quarries Act, 1954; The
Agriculture Safety Provisions Act, 1956; The Factories Act, 1961; and The Offices,
Shops, Railways and Railway Premises Act, 1963. In 1974, however, the government
implemented a new law termed The Health and Safety at Work Act (HSAWA). The Act
set up the Health and Safety Commission (HSC), a body corporate with a remit to
prepare regulations and issue codes of practice and guidance, and a Health and Safety
Executive (HSE). The HSAWA is referred to as an enabling act. That is, it provides
for a legislative mechanism whereby procedures specified in the offices of the Health
& Safety Commission can be translated into legally compelling regulations and the
'semi-legal' codes of practice. In summary, then, the HSAWA permits new

regulations, changes to existing ones and new or changed codes of practice to be
drawn up and directly issued by the HSC, so obviating the need each time for fresh
legislation and, let it be said, so avoiding the need for their prior scrutiny by the idiots
and drones sitting in parliament. A major instance of the culmination of this process
was seen in 1988, when nineteen regulations and four codes of practice relating to
dangerous substances were issued under the HSAWA, publicised throughout industry
as The Control of Substances Hazardous to Health Regulations (COSHH).
Also see The Transport of Dangerous Goods, above.
5.6.3 Civil Liability
Obligations in the matter of health and safety under the common law centre round the
duty of care and statutory duty. The duty of care arises from the relationship between
the employer as manager and the employee as subordinate, rather than from the
contract of employment. Statutory duty in H&S relates to the requirement to conform
to laws and regulations such as those described above. If the company fails in either of
these duties, and an employee is thereby injured (ie some detriment thereby befalls
him), that employee may take action in the courts for damages, alleging either the tort
of negligence or the tort of breach of statutory duty. Assuming the action is between
the employee as plaintiff and the employer as defendant, the employee must show
three things to succeed in an action for negligence. Thus:
1. that the employer owed the employee a duty of care;
2. that the employer did not fulfil the duty of care;
3. that as a result of 2., the employee suffered injury.
If causation is not present - ie if there is no link between (2) and (3), the action will fail.
The degree of care which must be exercised by the employer will depend on the
likelihood of an injury occurring and the likely severity of the injury if it does so
occur. In a judgment in 1949, Mr Justice Asquith expressed the principle thus: A
computation must be made in which the quantum of risk is placed on one scale, and the
sacrifice involved in the measures necessary for averting the risk is placed on the other.
Bearing in mind always the proportionality of risk and care required, the employer is
likely to have taken "sufficient measures" if:
(1) he has ensured that the employee is fully aware of the dangers of his work and
knows what precautions must be taken; and
(2) he has made precautions readily available, and ensured that the employer knows
of their existence.
That is, it is not the duty of an employer to eliminate every possible risk. There are
limits, namely the boundaries of reasonableness.
Note that if an accident occurs because of the malfunction of a machine or the sudden
failure of a supplier's component - for example, the splintering of a metal rod - statute
law in the form of The Employers' Liability (Defective Equipment) Act, 1969, applies
regarding anyone injured. Under the Act, the employer is deemed to be entirely liable
for an accident due to these reasons.
The word "foreseeable" used in the context of precautions to be taken, relates to a

foreseeable cause of an accident, not a foreseeable consequence of one . For example, in
Doughty v. Turner Manufacturing, an asbestos cement cover fell into molten metal,
causing an explosion. In court, Turner Manufacturing was able to show that no
similar accident of this type was known, and that it was not known that an explosion
would occur. Although Turner Manufacturing was directly responsible for the literal
occurrence of the accident, it was not liable in law for negligence, because it could not
be shown that it had lacked reasonable foresight. The case highlights the essential
need for the company, the company safety officer and the stores supervisor to keep
abreast of H&S knowledge from careful study of H&S magazines and HSC/HSE
publications. The defence offered by Turner Manufacturing of not knowing an
explosion would occur has not been available to any other company in the same
circumstances from the moment the facts were publicised in H&S literature.
5.7 Reviewing the Stores' Performance
There is a current vogue in the UK for setting targets for everything, whether they are NHS waiting lists or
traffic accidents on the M6. Three targets that could be devised for the stores might be "picking performance
better than 5.0 minutes per order line", "stock records accuracy of 97.0%" and "packages lost/damaged in
transit less than 0.1%". Setting targets and "measures of performance" however are fundamentally
misconceived for two reasons, as follows. (1) All human centred systems, such as the maintenance of stock
records, are liable to natural variation in output (due to what are called "common causes" of error),
invalidating the very idea of a fixed target. (2) When staff performance is measured by a target, hitting the
target becomes the sole focus of endeavour, rather than providing customer service. For example, hospitals
concentrate on performing a large number of fast, easy operations, regardless of the state of health of patients
waiting and medical emergency. Similarly, storemen measured on their picking rate may focus on speed at
the expense of accuracy.
There are two ways in which such an assessment might be made. The first is through the calculation of well-
known, standard financial parameters which reflect the general management of the facility rather than the
personal conduct of individuals. Three parameters are :
(i) Storage Costs (£ per pallet), including the ratio of (actual space occupied)/
(theoretical capacity) and the degree of honeycombing present;
(ii) Handling Costs :the cost of receiving, putting away, picking and despatching, per
unit handled
(iii) Stock Records Accuracy: the number of records correct/ the number of items
stored x 100%
The second assessment of performance is for the stores to present to each of its customers a statement of the
services it believes it offers and the principal areas where it is developing improvements. Then it must listen
very carefully to what its customers have to say and how its services might be changed or improved. Its
customers, we recall from the start of Section 1, are the shop floor, purchasing, distribution, quality, finance,
engineering and planning. In other words, forget targets, concentrate on customers.
Further Recommended Reading: ReInventing the Warehouse, by Roy L.Harmon, 1993 (The Free Press).
Last date of amendment 14th February 2007
The End
(c) The copyright of this site belongs to David Crabtree, formerly managing director of GMCS Ltd, at one time located in
Garstang, Lancashire, UK, phone 01995-601535. The site is maintained by the copyright holder on an occasional basis.
The text of this on-line course may not be reproduced for commercial reasons without the express written permission of
David Crabtree. Permission and suggestions relating to alterations, additions and amendments should be made by email
to info@gmcs.co.uk. The copyright holder does not guarantee the accuracy or completeness of the information in the
course.

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free course on stores and warehouse operations Page 1 of 69

A Free On-Line Reference Site

Index to Site (below)

1.1 The Purposes and Functions of the Stores/Warehouse

1.2 Stores & Warehouse Construction

1.2.1 The Building

1.2.2 Large-Scale Equipment

1.2.3 Floors and Floor Flatness

1.2.4 The Loading Bay

1.2.5 Other Important Areas

Special Storage Areas

Ancilliary Service Areas

1.2.6 Gathering Data

1.2.7 Changes in Modern Stores Design

1.3 Storage Options

1.3.1 Shelves and Bins

1.3.2 Racking (Non-Pallet)

1.3.3 Pallet Racking (Various)

1.4 Allocating Storage to Stock

Characteristics and appropriateness of racking systems

1.6 Material Flow Planning (Layout)

The Use of Simulation in Material Flow Planning

1.7 The Installation of Automation

1.8 Coding and the Stores 'Vocabulary'

1.9 Installing Technology

1.9.1 Batch v. On-Line

1.9.2 Data Recording Equipment

1.9.3 Voice Directed Picking (but see 4.2.7 below)

1.9.4 Data Communications

1.9.5 Weighing and Measuring Devices

1.9.6 Bar Coding & RFID Tags

1.10 Special Situations

Repairs and Maintenance

Layout and Organisation

1.10.2 Cold Stores

1.10.3 Tools Stores

2. Materials & Material Handling

2.1 Knowledge and Protection of Materials (including FIFO)

2.2 Pallets and Unit Loads

2.2.1 The Pallet

2.2.2 The Unit Load

2.2.3 Pallet Loss

2.2.4 Pallet Stacking

2.3.1 The Package

2.3.2 Packaging Waste

PRN (package recovery note)

2.4 Materials Handling

2.4.2 Equipment for Seizing and Lifting

2.4.3 Hand Operated Equipment

2.4.4 Power Driven Equipment

2.4.6 Order Pickers

2.4.7 Powered Conveyors

(For carousels, see 4.2.6)

2.4.9 Training and the 5 Rules

2.4.10 Avoidance of Double Handling

2.5 Transport and Despatch

2.5.1 Regulations and Safety

2.5.6 Arranging Transport - The Freight Forwarding Agent

2.5.7 Route Planning Software

3. Stores and Warehouse Operations

3.1 The Carriage of Goods (The INCOTERMS)

3.2 The Transfer of Goods and the Law