Warehouse Efficiency
Personal Care Limited(PCL) is a large and premier FMCG company in India with a turnover
of about Rs 2000 crore. It has 85 production plants spread over the whole country, producing
about 1200 products ranging from personal care to household goods.
The company has four of its own mother warehouses situated in the four zones of north, south,
east and west that receive products from almost all the plants on a regular and consignment
basis in containers by road. These warehouses are responsible for taking care of stocks, order
placement for next arrivals, loading and unloading, protective storage, stock recording, apart
from order processing and trans-shipment of goods to C&F agents of respective zone whose
numbers come around 150 per warehouse.
After receiving goods from various plants, these warehouses are first entered into the computer
for inventory recording purposes. Suitable storage location spaces are then assigned after taking
into consideration the quantity to be stored, the physical dimension, characteristics of items,
frequency of flow, and availability of the space, which is quite variable & flexible. For storage
of goods, flexible racking system is used so that the size of a rack’s space can be changed as
per the size on the product’s package. Furthermore, racking is back-to-back in pallet blocks
which are 5 storied and in one block, there are about 400 back-to-back rocks.
In certain areas, for selected heavy weight and bulk items, 50 selectors drive forklift trucks and
in the remaining areas, as many as 350 selectors pick the goods manually and use hand trolley.
Selectors are normally less educated and highly experienced, who have well-defined areas of
selection.
With the existing system, there have been a lot of practical problems, such as under utilization
of space, traffic congestion is aisles between the racks as one selector of blocks another’s
progress while he is picking items from a location, wrong assortment, difficult to track goods,
difficult to fill one single order as it contains a variety of items, etc. Furthermore, a trucker is
required to collect items from different places of the warehouse to make up the order.
Frequently, they have to wait for a full load. Then, the driver had to collect challan and other
required papers. Normally, this whole processes took seven to ten days, subject to ready
availability of the goods in the stock. In the case of stock-out items, it may goes anywhere in
between 15-30 days. That is why, replenishment cycle time for nearby C&F agents is about 15
days and for others, it comes around 3 weeks.
Due to a gradual increase in the quantum of competition and increasing customer expectations,
along with increasing awareness about the overwhelming contribution of L&SCM in cost
reduction and service requirement, the top management of PCL have appointed highly qualified
and experienced professionals at all four warehouses with the following objectives:
To improve the efficiency of the warehouses
To reduce the replenishment cycle time by 25 percent
To reduce the total logistical costs by 10 percent and
To have transparency in dispatch of premium products
Mr. A.K Sinha, who joined the north zone warehouse as chief warehouse manager, has had a
very successful career of 25 years. He wants to redefine the whole warehouse operating system
QUESTIONS
1. How should Mr. Sinha approach this problem?
2. Develop a strategy to overcome the problem and fulfill the redefined objectives of the firm?
3. What changes would be recommended for the implementation of the new strategy?
4. Suggest measures for evaluation of performance of the warehouses?
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