A simple definition of a warehouse is:
‘A warehouse is a planned space for the storage and handling of goods and material.’ (Fritz Institute)
In general, warehouses are focal points for product and information flow between sources of supply and beneficiaries. However, in humanitarian supply chains, warehouses vary greatly in terms of their role and their characteristics.
The global warehousing concept has gained popularity over the last decade as stock pre-positioning becomes one of the strategies for ensuring a timely response to emergencies. They are usually purpose built or purpose designed facilities operated by permanent staff that has been trained in all the skills necessary to run an efficient facility or utilising 3PL staff and facilities. For such operations, organisations use, information systems that are computer based, with sophisticated software to help in the planning and management of the warehouse. The operating situation is relatively stable and management attention is focused on the efficient and cost effective running of the warehouse operation. Numerous organizations have centralized pre-positioning units strategically located globally. Some of these offer extended services to other humanitarian organizations on a cost plus operating charges basis. The United Nations Humanitarian Response Depot (UNHRD) Network.
They are usually temporary in nature. They may be housed in a building which was not designed to be used as a warehouse or in a temporary building/structure, in mobile units such as rub halls, Wiikhalls and sometimes are little more than a tent in a field. The initial staff may be a casual workforce that has never worked in a warehouse before and the inventory system is more likely to be paper based. Often the situation is initially chaotic, sometimes dangerous coupled with a humanitarian need which may be very urgent. The management style must therefore be practical and action oriented with a focus on making the humanitarian goods available as quickly and efficiently as possible, but yet at the same time accountable.
The policies contain hard and fast rules and regulations that define the general conduct of the warehouse operation. Examples of the types of policies that organisations will define are as follows:
The procedures' document defines step by step how the activities in the warehouse should be carried out and clearly defines the processes to be adopted. These can be adopted as ‘best practice’.
The procedures provide visibility of the operations for managers and donors.
However, in creating such procedures, care must be taken to avoid constraining the use of local initiative which might be required to deal with local conditions. Procedures should be considered as streamlining the business processes and providing checks and balances. They provide guidance to warehouse managers and must have some level of flexibility to cater for unique situations, than to be rigidly adhered to. This can be achieved by limiting the level of detail that the procedures document defines, allowing more flexibility and/or by arranging ‘dispensations’ to allow departure from the procedures in order to optimise local performance, especially in emergencies.
The procedures will normally provide the step by step guidance on how to manage each aspect of warehousing and may cover:
See also a Warehouse Rental Contract sample.
See Inventory Management Guidelines and refer to the Annexes for different samples: Perpetual Inventory form, Stock Count Report form, In/Out Stock Report form.
In determining needs, one should look beyond the basic need of a warehouse to store things. Whilst, this is correct there are also other considerations.
Selecting a Suitable Location
There are a range of factors to consider when deciding on the location of a new warehouse facility and these may vary depending on whether you are selecting a location for a temporary building or selecting from one of a number of existing buildings.
These may include:
Factors to consider:
The areas that should be planned are both the general storage areas and the areas for goods receipt, consignment picking and goods dispatch. It is also desirable that space should be set aside for the following activities:
It is worth keeping these requirements in mind during the planning of the main operating areas. Planning consideration needs to be given to the following:
How to calculate warehouse storage space.
Special storage needs
Some relief items require special attention in terms of the type and security of the storage area. For example:
Space utilisation and handling
Diagram 1: Space utilisation
As shown above, the warehouse operation is composed of four key work activities:
To estimate the resource requirement for the whole warehouse, one should start by estimating the requirements for each of the key work activities in turn and the level of demand. Then, the resource requirements for all activities should be combined together, taking into account the way that the activities are phased during the working day, in order to make an estimate of the total resources required.
It has been established that the role of inventory management is to ensure that stock is available to meet the needs of the beneficiaries as and when required.
Inventory represents a large cost to the humanitarian supply chain. This is made up of the cost of the inventory itself, plus the cost of transporting the goods, cost of managing the goods (labor, fumigation, repackaging, etc) and keeping the goods in warehouses. The inventory manager's job is to make inventory available at the lowest possible cost.
In order to achieve this, the inventory manager must ensure a balance between supply and demand by establishing minimum holding stocks to cover lead-times. To achieve this, the inventory manager must constantly liaise with the programs to keep abreast of changing needs and priorities. The warehouse must always have sufficient stocks to cover the lead-time for replacement stocks to avoid stock-outs.
There are two methods of inventory control that are applicable to emergency situations:
Both are applicable to humanitarian situations and have associated pros and cons. Note that EOQ in practice only works in a fairly stable environment where demand variability and replenishment lead-time are reasonably stable and predictable. This is not the case in an emergency. Economic order quantity is applicable in more stable environments such as refugee camps and perhaps later in a relief/recovery phase.
Inventory management in an emergency is more ‘project based’, matching supply with demand in a rapidly changing environment. This requires building a supply chain that has a high level of flexibility and adaptability, with rapid identification of need and rapid fulfilment of that need through the supply chain.
In managing this sort of system, inventory should be considered in relatively small quantities (inventory packages of associated relief items) that are attached (pegged) to an identified need then moved (and tracked) through from source to the identified need (the user).
Optimisation comes from having logistics systems that can configure, procure and consolidate these packages quickly and at least cost and a distribution chain that is flexible and can adapt to changing requirements quickly and at least cost.
Information systems that facilitate transparency of the supply chains inventory levels and location + peg supply to demand provide the visibility necessary to facilitate good planning and decisions that maximise service and reduce cost.
The warehouse/inventory manager is responsible for monitoring the movement of goods as they are transported from the supplier and for the control of stock movement in the warehouse facility.
The vital stock control measurements include:
See monthly inventory report and stock report.
Monitoring Goods in Transit
To facilitate and account for movement of stocks the following documents could be used:
See in the Annexes the warehouse flow chart.
Stock Records - Documentation
In addition to the work methods, equipment and space requirements it is essential that the warehouse is adequately resourced. This is done by planning or estimating the requirements for people and equipment in order to operate the warehouse facility.
There is a trade-off to be made between the people and handling equipment requirements for any given workload.
In global warehouse operations, which are run like commercial operations, the focus is on minimising the cost of running the operation. In this situation, it is often better to invest in handling equipment and reduce the dependence on people resources.
However, in field operations, many humanitarian organisations prefer to hire local labor which provides employment instead of relying on handling equipment.
The requirement for the total amount of resources required will be determined by the amount of goods flowing into and out of the warehouse, as shown in the diagram below.
Basic Warehouse Equipment
Various types of equipment are required to ensure the smooth execution of work in a warehouse. All equipment should be properly stored when not in use and a regular maintenance schedule posted. Warehouse staff should be trained in standard daily maintenance practices and the correct use of equipment. Where necessary, they should be equipped with personal safety equipment such as work gloves, work boots, goggles, etc.
Required equipment may include:
Care of Warehouse equipment
Warehouse equipment is maintained to prevent accidents and breakdowns from occurring.
Maintenance activities consist of inspections, regular servicing and monitoring performance for failure trends, as this will enable symptoms to be recognised before failure occurs.
Equipment maintenance has a strong health and safety bias. Often health and safety legislation will impose on management an obligation for safe systems of work. Ensuring safe policies and procedures of work will require an examination of men, machinery, methods, materials and environmental aspects.
Some areas to pay attention to:
Leasing Temporary Warehouses/Contracting.
The common practice in emergencies is to lease or rent, not purchase warehouses. In this situation, there is often a shortage of suitable buildings or locations for warehouse space and this can often cause the costs to increase significantly. Therefore, it is often necessary to utilise temporary warehouse space for as short a time a possible.
Care must be taken with the drawing up of the lease agreement (See Warehouse Rental Contract sample) with the owner. The following items are basic inclusions and in a lease agreement:
The warehouse is a key component of the supply chain in emergencies. It buffers uncertainties and breakdowns that may occur in the supply chain. When properly managed and appropriately stocked a warehouse provides a consistent supply of material when it is needed.