International Journal of Discoveries and

Innovations in Applied Sciences

Warehouse Processes from Replenishment to Despatch and Beyond

Abdirakhimov Azizbek Abdiqaxxor ugli

Abstract:
Today, the radical reform of warehouse logistics and its modernization lead to further development
of this field. In this article, we will consider how to fill the warehouse and the sequence of
processes in it.
Keywords: Warehouse, filling, system, logistics, operation, cargo flow, transport, cargo, product,
cargo order, pricing, security, securities.

Introduction
In this chapter we examine the remaining processes within the warehouse. These include
replenishment, value-adding services and despatch, together with the peripheral but essential tasks
of stock counting and housekeeping. We also look at security measures that can be taken within the
warehouse.
Replenishment
In order to ensure a smooth and efficient picking process we need to ensure that the right products
and quantities are in the correct pick location. This is replenishment.
As in the case of replenishing overall inventory to ensure customer satisfaction, the warehouse also
has to replenish its pick faces regularly to ensure picker satisfaction. An empty picking slot, just
like an empty shelf location in store can mean a lost sale. The result of a poor replenishment
process is order shortages, increased picking times and therefore increased cost per pick and an
overall reduction in service level.
Real-time WMSs will recognize the need to replenish pick locations through real-time data transfer.
These systems are also able to identify the total actual order quantities and therefore replenish
before the next wave of orders arrive on the warehouse floor.
Other systems will rely on a trigger that denotes when the stock level within a pick face falls to a
certain level. This will rely heavily on timing as orders that have generated pick lists may not
actually have been picked and therefore replenishment has been triggered early. Late replenishment
can result where staff have picked out of sequence, for example, and emptied the pick bays before
the replenishment team have had an opportunity to top up the location.
Timing is crucial. An early instruction to replenish can cause as many problems as late
replenishment, with potentially overfull pick faces and issues with FIFO.
If product can be moved directly to the pick face from the inbound section this cuts out a number of
processes. This will require a certain amount of preplanning to ensure that pick faces are not
overfilled. Pallets can be de-layered to correspond with expected pick quantities.
In the absence of a warehouse management system the warehouse manager will need to first ensure
that the pick faces are designed to take the optimum quantity of product based on predicted sales
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 International Journal of Discoveries and
Innovations in Applied Sciences
| e-ISSN: 2792-3983 | www.openaccessjournals.eu | Volume: 3 Issue: 5
per day or per shift and cubic volume, and staff need to be trained to identify replenishment
requirements and inform either the supervisor or the forklift truck driver, depending on how the
process has been set up.
One other point to note here is that although real time dictates that replenishment and picking can
occur simultaneously, there are issues of worker safety if forklift trucks and pedestrian pickers are
working together in the same aisle.
This can be alleviated by incorporating multiple picking locations for the same SKU, the utilization
of flow racking where product is replenished from a separate aisle and by carrying out the two
activities at different times of the day if feasible. For example, receiving and replenishment can
take place in the morning whilst picking takes place in the afternoon.
Alternatively, replenishment can take place during breaks or after picking has been completed for
the day. This mirrors what happens at retail stores where shelf replenishment takes place when
stores are closed overnight. Bendi‟s introduction of their combined articulated truck and picker will
also go some way to alleviate the problem of empty pick faces whilst picking.
Value-adding services
Many warehouses have introduced areas where value-adding services can be carried out. These are
common in both dedicated and shared-user or public warehouses where third-party logistics
companies are providing an all-encompassing service to their customers.
These value-adding services include the following:
 (re)labelling;
 pricing;
 tagging and kimballing;
 (re)packing;
 bundling, as in „buy one, get one free‟ (BOGOF) offers;
 reconfiguration;
 sub-assembly;
 repair and refurbishment.
Undertaking shop-floor-ready labelling, tagging, bundling and pricing in the warehouse removes
the task from the retail assistants who can spend more of their time selling.
More sophisticated services include some form of production as in the case of postponement where
items are added once the customer‟s order is known. This can include the inclusion of graphics
cards and the loading of software in the case of personal computers and laptops. It can also include
the fitment or inclusion of a particular part for a specific market. The UK electrical plug is a typical
example as it differs from the rest of Europe.
Postponement can be described as a delay in the completion of an item until an actual order is
received from a customer. Postponement not only saves time but reduces inventory holding by
reducing the total number of SKUs held in stock.
Value-adding services can also include returns processing and a repair service. This area is covered
in more detail at the end of this chapter.

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 International Journal of Discoveries and
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| e-ISSN: 2792-3983 | www.openaccessjournals.eu | Volume: 3 Issue: 5
Sufficient space needs to be made available for these tasks, with access to power and being close to
the despatch area, thus reducing any unnecessary movement. An ideal location, if the height of the
warehouse allows it, is above the despatch bays on a mezzanine floor.
Indirect activities
There are many support activities that occur in warehouses and are crucial to the efficient operation
of the warehouse. These are, in the main, undertaken by supervisory staff, specialist teams and the
housekeeping team. These activities include:
 ensuring optimum staffing levels and providing a pool of suitably trained staff for peak periods;
 managing the allocation of labour for value-adding services;
 ensuring optimum space utilization;
 monitoring work flow and congestion;
 provision, allocation and maintenance of equipment;
 identification and replenishment of fast-moving items;
 identification of non-moving stock;
 stock integrity and dealing promptly with non-conforming, lost or found stock;
 managing cycle counts and organizing full stock checks;
 security of high-value or hazardous stock; and
 ensuring the cleanliness of the warehouse and the safety of both staff and visitors.
The above tasks can be separated into three distinct sections:
 the management of labour, space and equipment;
 the control of stock; and
 the security and safety of stock and people.
Stock management
Inventory or stock management and warehouse management tend to be two very distinct roles.
Warehouse managers are in a position to advise their inventory colleagues on levels of safety stock
and the specific movements and characteristics of particular stock items. However, they tend to
stop short of determining stock levels.
This function is a major part of a company‟s operation and the theories and practices are covered in
many books on the subject of inventory management.
Although the majority of warehouse managers are not involved directly in the choice, purchase and
replenishment of stock, they can play a role in the identification of fast-, medium-, slow-, non-
moving and obsolete stock.
This can be done using one of the mainstays of a warehouse manager‟s armoury – an ABC
classification.
A warehouse manager can extend the normal classification to include nonmoving and obsolete
stock together with identifying stock that may not require storage in the warehouse but can be
despatched direct from the supplier to the end customer where the lead-time is in line with the
customer‟s requirement.
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 International Journal of Discoveries and
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The classification might look something like that shown in Table. The percentages will vary
significantly by company and by market sector.
Maintenance stores are likely to have a high proportion of their stock in the C to X categories. The
goal is to identify the items in the C to X categories and act accordingly.
Obsolete or non-moving stock needs to be analysed and one of the following tasks undertaken:
 Return to seller if the contract allows.
 Sell to staff at a discount.
 Sell the item at a highly discounted rate either through normal channels or via companies who
specialize in selling overstocks and obsolete items.
 Assess whether it is cost effective to break the item down into its constituent parts.
 Donate to charities.
 Dispose of the product as cheaply as possible. This may incur charges but it will release space
to store other faster-moving product in its place.
A quick and easy way of ascertaining whether there is an excess of slow-moving stock in the
warehouse is to calculate the stock turn:
Stock turn = cost of goods sold ÷ average cost of goods stored
or:
Annual throughput in units ÷ average number of units held in stock
For example, an annual throughput of 1,200,000 units with an average stockholding of 100,000
units gives a stock turn of 12. That is, the stock turns over once per month.
A low turn in most operations suggests that stock sits in a warehouse for far too long, implying that
the safety stock level has been set too high.
Typical examples of stock turn within companies are as follows:
150 +: world class using just-in-time techniques;
120 +: chilled foods;
18 +: retail;
10–30: European manufacturing;
<3: maintenance stores.
The higher the figure, the better the company is performing in terms of inventory management.
Maintenance stores will always have low stock turns through having to hold stock in case of
breakdown.
Stock or inventory counting
All warehouses are obligated to undertake some form of stock count. It depends on the law of the
country and accounting requirements as to how frequent and comprehensive the count is. We have
seen over recent years a move towards cycle counting or perpetual inventory counts as a
replacement for an all-encompassing annual count of stock in the warehouse. A full stock count
usually necessitates the closure of the warehouse for a period of time when all inbound and
outbound movements are suspended. A significant drawback of a single annual count is the
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 International Journal of Discoveries and
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difficulty in reconciling the discrepancy as it could have occurred over 11 months ago.174
Warehouse Management The count is normally carried out at the company‟s year-end. Some
companies will carry out quarterly or possibly half-yearly checks depending on the stipulations laid
down by the auditors. More recently, providing the company can prove that its cycle counting is
accurate, auditors have agreed in some cases that if each stock line is counted and audited at least
once per annum that will be sufficient for their needs. Providing the cycle counts are considered to
be accurate, the year-end stock figures will be taken from the WMS.
Cycle counting or perpetual inventory counts
When undertaking cycle counts it is prudent to use an ABC analysis to ensure that your fast-
moving and high-value items are counted more frequently than your slow-moving, inexpensive
items. Mis-picks are more likely with fast-moving goods, and high-value items are prone to
shrinkage. It is suggested therefore that fast-moving and high-value items are counted monthly,
medium sellers are counted quarterly and slow-moving items either once or twice a year.
The following percentages can be used to ensure a comprehensive count:
 8 per cent of A items counted weekly (ensures each SKU is counted approximately once per
quarter);
 4 per cent of B items counted weekly (counted twice per annum); and
 2 per cent of C items counted weekly (counted at least once per annum).
The accuracy of the counts will also determine the frequency. A high error rate should result in
more frequent counts until the accuracy improves. Each discrepancy needs to be investigated and
procedures put in place to ensure that there is no repeat of the problem. Increasing the frequency to
daily ensures a more accurate count; however, this will depend on the number of product lines,
available resource and the cost of that resource. The trade-off here is the cost of the error against
the cost of discovering it in the first place. As mentioned previously, a number of auditors will be
happy (or as happy as they can be) if stock in the warehouse is counted at least once during the
year. All stock counts require organizing. You need to know who will undertake the stock count,
what you are planning to count, when you plan to undertake the stock count, what tools and
equipment you need and the timescale allotted. For example, if you are counting at height you will
need to ensure the safety of the warehouse staff. If you are using forklift trucks a suitable safety
cage needs to be provided. Under certain health and safety legislation and company rules the use of
cages on forklift trucks are deemed unacceptable and therefore specialist equipment is required
such as elevated work platforms (cherry pickers). Prior to the start of the count ensure that all items
have been put away in their correct location and try to despatch as many items as possible prior to
the stock take. Secondly, ensure that any obsolete units are disposed of before the start of the count.
There is no point in counting stock that shouldn‟t be in the warehouse.
Some companies will affix a different coloured label on pallets during each year‟s count. One way
of identifying non-moving or slow-moving stock is to look for the labels from the earliest stock
count. In the past we have identified stock items that have gone through a significant number of
counts and the pallets or cartons have never moved. It is normal to have a counter and a checker for
each section if you are using a paper-based system. If you are scanning locations and products, one
person per section should be sufficient. An auditor is likely to be present during a full count to
make random checks of locations to verify the count is accurate. In order to complete a full stock
count in the shortest possible time to minimize disruption to sales, companies will inevitably use
staff who are unfamiliar with the products. As these counts normally take place at weekends or
over the Christmas and New Year vacations, their motivation to do a thorough job might also be
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 International Journal of Discoveries and
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suspect. Where there are a significant number of locations and a number of open cartons and
individual items to be counted, it is likely that additional staff will need to be employed from
agencies to assist in the count to ensure it is completed in time. However, completion on time is
rarely the case as the number of discrepancies can take days to resolve. As a result, operations
resume so as not to let customers down but this tends to compound the problems. This is why a
number of companies are turning to cycle counts as opposed to full-blown stock counts. Outside
agencies who are experienced in stock counts can be employed as an alternative but can be
expensive and the issue of product familiarity is also a factor. Any discrepancies between the
system figures and the count figures should be checked immediately by a supervisor and this
continues until you arrive at two matching figures, be they the last two counts or the count and the
system figures. The likelihood of finding the reasons for a discrepancy are low as a year‟s
transactions have passed through the warehouse since the last count. The root cause of discrepancy
is seldom discovered and as a result cannot be eliminated. With a paper system it is usual to
provide staff with details of locations and product codes but with the quantities removed. Quantities
are written on the sheets together with any changes to the product codes and other comments such
as damages are recorded. This can lead to further inaccuracies as the administration staff try to
decipher each person‟s writing whilst typing the results into a spreadsheet or database. This system
of counting is fraught with problems and if agreed by auditors a perpetual inventory counting
system should be introduced to replace the single annual count. In terms of performance measures
companies need to record the number of errors found, not the difference in monetary value as this
can hide a number of problems. A difference of a few hundred dollars may seem acceptable;
however, there could be hundreds of errors within the system such as the following:
 products in incorrect locations;
 too many items of one product; and
 too few items of another product.
These may balance out but they need to be logged, measured and corrected before operations
recommence.
Security
Security of product within the warehouse is paramount. The warehouse manager is responsible for
the integrity of all the products under his or her care, whether they are owned or stored on behalf of
other companies as a third party contractor. This can be achieved through good housekeeping, the
use of security cages and carousels for storage, and through vigilance by staff. Poor security costs
companies in lost inventory, higher insurance premiums and personnel turnover. Loading docks
and platforms tend to be the most vulnerable areas – they‟re very easy places for a thief to remove
stolen property, often in partnership with an outsider, a delivery driver for example. Security
systems tend to be designed to protect your facility from people breaking in – but many thefts are
perpetrated from within. Closed-circuit television at strategic points throughout the warehouse is a
significant deterrent; however, unannounced inspections and walkabouts are also effective and
much cheaper. With regard to the loading bays, one common-sense recommendation is that you
separate them from employee parking areas, making it much more difficult to remove items from
the warehouse. Searches on entry and exit, whether instigated by staff or by a random system of
lights, is also very effective. Not only is product security important but also the protection of data.
WMSs hold a large amount of sensitive data that needs to be protected. Internally this can be done
through the use of password protection for different access levels and firewalls for external
protection. The data needs to be backed up daily and the backup files stored offsite. Protecting data
from being stolen or copied is also paramount. Equipment such as servers, computers and laptops
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 International Journal of Discoveries and
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need to be protected. These items need to be locked with key or code access, and personal
computers need to be password protected and those passwords changed regularly. The core
attributes of security within a warehouse are as follows:
 appropriate recording of inbound and outbound products;
 authorizations for all despatches;
 accurate audit trails;
 regular stock checks;
 the use of appropriate storage equipment; and
 vigilance.
Despatch
The order cycle time or lead time from order receipt to despatch is continually shortening and there
is increased pressure on the warehouse manager to coordinate all activities to ensure that product is
despatched on time and complete.
Packing – pieces/items/eaches
Once product has been picked there is the question of how it is packaged for despatch. As
previously discussed, with individual order picks the operator may well package the product
immediately, attach shipping labels and where required insert despatch documentation and
invoices. This reduces the number of touch points in the warehouse but does take the operator away
from the prime task of picking. Where there is the possibility of damage in transit, material can be
added to the carton such as polystyrene and foam pellets, shredded paper, corrugated paper, air-
filled bags, etc. This again increases time at despatch and puts the onus on the customer to dispose
of the excess packaging on receipt. Where possible this material needs to be recyclable. The use of
carton erectors which cut the cardboard to fit the contents is one way of overcoming this problem.
The trade-off here is the cost of the machine versus the labour and material cost of doing it
manually and the cost to the customer. If orders are required to be checked on despatch this is an
ideal time to add the paperwork and affix labels. In terms of checking, items can be removed from
the pick container, checked against the order and returned to the original carton or if the order was
picked into a tote it can be transferred to a shipping carton. Other methods of checking include
weighing the carton and comparing this weight with a system generated weight. This is preferable,
providing the information held in the system is 100 per cent accurate. This also reduces the labour
required in this area and assists with load planning. The need to check every order before it leaves
the warehouse may well be a requirement for very high value products and products such as
pharmaceuticals but I have to question the need to check every despatch order when it comes to
other products. Companies need to measure the accuracy performance of their pickers and base the
amount of checking on this figure. A picking team that is constantly achieving > 99.9 per cent
accuracy requires minimum checking. Random checks will suffice. Where there is a drop in
accuracy the amount of checking can be increased for a time but so should the training of the
operators until the accuracy is restored. There is a trade-off here between the cost of the operators
who are checking every order and the overall cost of mis-picks. There is no point in spending
£20,000 ($31,400) on a checker per annum to save £3,000 ($4,710). The introduction of automation
into this area of the warehouse enables companies to use equipment to automatically insert
paperwork into a shipping container, attach a lid and label it correctly.

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Packing – cartons
Full carton despatch is somewhat easier to manage. Individual cartons may require the attachment
of a shipping label which may be generated from the WMS or from a carrier system such as those
operated by UPS, Fed Ex, USPS and the Royal Mail. In terms of multiple carton dispatch, firstly
there is a need to establish whether it is more cost effective to despatch via a parcel network or a
pallet distribution or LTL carrier. This will decide the means of shipment – loose cartons or a
palletized load. If palletized, the decision here is how to stabilize the cartons on a pallet for
despatch. Many companies will use stretchwrap to do this. Some companies will stretchwrap
manually whilst others utilize an automatic stretchwrap machine. The trade-off here is the cost of
the machine versus the cost of labour and the reduction in the use of stretchwrap material. Velcro
has introduced pallet straps to secure cargo. These are more environmentally friendly than
stretchwrap but there is the added complication of tracking and returning the straps for reuse. The
use of returnable packaging is also growing under environmental pressure. The use of plastic totes
and pallets, slipsheets and collapsible cages is growing; however, there is a trade-off here between
the initial cost of these items and the cost of returning them to the shipper versus the cost in money
and environmental terms of cardboard packaging and one-way pallets.
Loading
The efficient loading of containers and trailers is crucial in today‟s environment of rising fuel
prices. Unused space is inefficient and can cost a company a great deal of money. Efficient loading
of vehicles and containers begins with the initial packaging of the products. Companies need to
ensure that the outer packaging of their products is designed to fit perfectly onto the pallets used for
both transportation and storage. The ideal is to ensure no overhang whatsoever with a reduction in
unused space. It also needs to be robust enough to travel. Pallet loads need to be configured to
ensure that product damage is minimized, cubic capacity is fully utilized, load stability is ensured
and the configuration is acceptable to the receiving location.
Fortunately, there is software available to not only assist with pallet configuration but also
container and trailer loading. The software can optimize packing within a container and trailer, on a
pallet and even within an individual carton. This sophisticated software optimization not only takes
into account the cube of the products but also their load bearing strength and location within the
container. The latter ensures ease of off-loading at the receiver with all the cartons from the same
product line being located together. The software also ensures that lighter items are packed on top
of the heavier items. Examples include Cube-master and Cube-Designer.
Documentation
Finally, despatch documentation and labelling needs to be completed to ensure compliance with
customer requirements and government legislation. Different countries will have different
requirements and these will also differ if shipments are within country or for export.
Any errors in the export paperwork can result in non-shipment, seizure, fines or delays. When
shipping hazardous material, it is essential that products are labelled accurately and have the correct
documentation. Typical despatch paperwork depending on ultimate destination includes the
following:
 advanced shipping notice;
 manifest;
 shipping labels;

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 Bill of Lading;
 commercial invoice;
 shipper‟s export declaration;
 export packing list;
 certificate of origin;
 export licence;
 inspection certificate; and
 insurance certificate.
As mentioned above each country will have its own requirements in respect of the documentation
needed.
Role of the driver
In situations where companies operate with their own transportation there are no issues with what
the driver‟s role is in the actual loading process. However, when third-party contractors are used
there is the age-old dilemma of what to do with the driver whilst the loading process takes place.
Some companies insist on the driver assisting with the loading and checking the contents of the
load, whilst other companies have health and safety issues with external staff being on the loading
bay. If the latter is the case then the driver has to be accommodated elsewhere, preferably not in his
cab. The possibility of the driver moving off the despatch bay whilst the vehicle is still being
loaded is just as real. There is also the question of what the driver should sign for once the vehicle
has been loaded. If he has not seen the products loaded onto the vehicle and the vehicle has been
sealed prior to leaving the despatch bay, then it is reasonable to suggest that he is at liberty to sign
the document and preface it with the word „unchecked‟. A time limit needs to be agreed in terms of
how long the collecting company has to report any discrepancies. If the vehicle is sealed, the seal
number needs to be recorded on the delivery paperwork and any other relevant documentation such
as hazardous data sheets handed to the driver.
Summary and conclusion
This chapter has examined replenishment, value-adding services, support functions and despatch.
We have already suggested that both receiving and picking are crucial roles; however, within the
warehouse, the above operations are no less important. Well-timed replenishment will ensure an
efficient pick operation whilst a timely and accurate despatch ensures that customer lead times are
achieved or at times surpassed. The warehouse‟s ability to undertake value-adding services enables
the manufacturer to postpone certain activities until the order arrives, resulting in fewer stock
codes, and it enables retailers to transfer activities from the retail store back to the warehouse,
freeing up valuable sales time. Stock counting and security are fundamental to the integrity of
products stored in the warehouse and are crucial to maintaining credibility whether an in-house or
outsourced operation.
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