dissertation azaf cov uni

M99EKM DISSERTATION-MSc SUPPLY CHAIN MANAGEMENT

DESIGNING INTERNATIONAL

WAREHOUSE FOR SEMI-FINISHED WOOD

By

ASAF RASHEED

September 2011

The work contained within this document has been submitted by the student in

partial fulfilment of the requirement of their course and award


ABSTRACT

The project throws its light mainly on the designing of warehouse for storage of semi-

finished wood parts. In order to attain this ultimate goal the researcher has created the

following objectives. As the research location is China it is very important to analyse the

political issues and other formalities of establishing a warehouse in that country. Another

major objective is to review the treatment methods for the protection of the wood parts from

damage. Finally the researcher aims to find better methods to design a well structured

warehouse suitable for wood products.

To attain these objectives the researcher had to conduct interviews, critically analyse the

literature review about the layout and design of a well structured warehouse and also

evaluated a case study. This helped the researcher to create an overall picture for the

designing a warehouse which meets the above mentioned objectives.

The main conclusion derived from this project was that an advanced, well structured and cost

effective warehouse implementation can be achieved only through proper study of the

political, economical and environmental condition of the country where the warehouse is

going to be designed.


TABLE OF CONTENTS

ABSTRACT ............................................................................................................................................... 2

ACKNOWLEDGEMENT ........................................................................................................................... 6

INTRODUCTION ....................................................................................................................................... 7

1.1 BACKGROUND OF THE PROJECT ................................................................................................ 7

1.2 PROBLEMS ....................................................................................................................................... 7

1.3 AIM AND OBJECTIVE OF THE RESEARCH ................................. Error! Bookmark not defined.

1.4 RESEARCH QUESTION .................................................................... Error! Bookmark not defined.

1.5 RESEARCH OBJECTIVES ................................................................ Error! Bookmark not defined.

1.6 PERSONAL INTEREST ..................................................................... Error! Bookmark not defined.

2. LITERATURE REVIEW .......................................................................... Error! Bookmark not defined.

2.1 INTRODUCTION ............................................................................... Error! Bookmark not defined.

2.2 WHAT IS WAREHOUSING .............................................................. Error! Bookmark not defined.

2.3 TYPES OF WAREHOUSES ............................................................... Error! Bookmark not defined.

2.3.1 PRIVATE WAREHOUSES .......................................................... Error! Bookmark not defined.

2.3.2 PUBLIC WAREHOUSES ............................................................. Error! Bookmark not defined.

2.3.3 BONDED WAREHOUSES ........................................................... Error! Bookmark not defined.

2.4 BENEFITS OF WAREHOUSING ...................................................... Error! Bookmark not defined.

2.5 FUNCTIONS OF WAREHOUSING AND WAREHOUSING FUNDAMENTALSError! Bookmark not defined.

2.5.1 BASIC WAREHOUSING FUNCTIONS ................................... Error! Bookmark not defined.

2.5.1.1 RECEIVING RAW MATERIALS ........................................ Error! Bookmark not defined.

2.5.1.2 TRANSFER OR PUT AWAY ............................................... Error! Bookmark not defined.

2.5.1.3 STORAGE ............................................................................. Error! Bookmark not defined.

2.5.1.4 ORDER PICKING .............................................................................................................. 16

2.5.1.5 PACKING ........................................................................................................................... 16

2.5.1.6 SHIPPING FINISHED GOODS......................................................................................... 17


2.6 THE NEXT GENERATION WAREHOUSES ................................................................................ 17

2.7 FRAMEWORK FOR DESIGNING WAREHOUSE LAYOUT ...................................................... 18

2.8 STEPS IN DESIGNING THE WAREHOUSE FRAMEWORK ..................................................... 19

3. RESEARCH METHODOLOGY ............................................................................................................ 26

3.1 INTRODUCTION ............................................................................................................................. 26

3.2 RESEARCH PHILOSOPHY ............................................................................................................ 26

3.2.1 POSITIVISM PHILOSOPHY ..................................................................................................... 27

3.2.2 INTERPRETIVISM PHILOSOPHY ........................................................................................... 27

3.2.3 PHENOMENOLOGY PHILOSOPHY ....................................................................................... 27

3.3 RESEARCH APPROACH ................................................................................................................ 28

3.3.1 INDUCTIVE APPROACH ......................................................................................................... 28

3.3.2 DEDUCTIVE APPROACH ........................................................................................................ 29

3.4 RESEARCH METHOD .................................................................................................................... 29

3.4.1 QUALITATIVE METHOD ........................................................................................................ 29

3.4.2 QUANTITATIVE METHOD ..................................................................................................... 30

3.5 DATA COLLECTION METHOD .................................................................................................... 30

3.5.1 PRIMARY DATA COLLECTION METHOD ........................................................................... 30

3.5.2 SECONDARY DATA COLLECTION METHOD ..................................................................... 31

3.6 DATA ANALYSIS METHODS ....................................................................................................... 32

3.6.1 DESCRIPTIVE ANALYSIS ....................................................................................................... 32

3.7 RELIABILITY AND VALIDITY ....................................................... Error! Bookmark not defined.

3.8 STRENGTH AND LIMITATIONS OF THE RESEARCH .............. Error! Bookmark not defined.

3.9 SUMMARY .................................................................................................................................... 33

4. DATA ANALYSIS .................................................................................... Error! Bookmark not defined.

4.1 INTRODUCTION ............................................................................... Error! Bookmark not defined.

4.2 STANDARD COMPANY PROFILE ................................................. Error! Bookmark not defined.

4.3 PROBLEMS IN STORAGE OF WOODS ....................................................................................... 39


4.4 SUMMARY ........................................................................................ Error! Bookmark not defined.

5. INTERVIEW QUESTIONS ................................................................................................................... 41

5.1 OUTCOMES OF THE INTERVIEW ........................................................................................... 44

6. DISCUSSION ............................................................................................................................................. 45

7. CONCLUSION ........................................................................................................................................... 47

7.1 OBJECTIVES OF THE RESEARCH ............................................................................................................. 47

8. RECOMMENDATIONS .............................................................................................................................. 49

REFERENCE .............................................................................................................................................. 51

LIST OF FIGURES

Figure 1: Lay out of storage in STANDARD company ............................... ...............39

LIST OF TABLES

Table 1: Colour coding used by STANDARD company ............................................ 38


ACKNOWLEDGEMENT

I take this opportunity to thank my supervisor Dr. JIM ROWLEY for his guidance and

support from the initial stage to the end of the of project work. The feedbacks provided by my

supervisor made my task much lighter and easy to accomplish.

My heartily gratitude goes to my tutors and all my friends who helped me to finish this

project successfully I also take this opportunity to thank my parents who provided me with

their moral and financial support throughout my masters programme. I am thankful to all my

batch mates who have provided assistance in completing my final project and other modules.


CHAPTER 1

1. INTRODUCTION

1.1 BACKGROUND OF THE PROJECT

A warehouse is a planned and well arranged space for the handling and storage of goods and

materials (FRITZ Institute). In general we can say that warehouses are the focal point for the

product and information flow between the sources of supply and beneficiaries. However, in

humanitarian supply chains, warehouses vary greatly in terms of their characteristics and

their roles. This research is not a general study of designing and functioning of common

warehouse, but is of designing a well organised and structured warehouse for semi-finished

woods.

In this project the literature review tells about the existing body of knowledge on designing a

warehouse focused on storing semi-finished wood products which is used for the

manufacturing of guitar. It also describes the history, layout, general principles, basic

functions and advantages of warehouse. For the better delivery of the listed objectives on the

project, the researcher has conducted an interview and included valuable case study.

1.2 PROBLEMS

Political issue

As the warehouse is planned to open in another country (China) there will be many problems

regarding its licensing.

Decaying of wood

As the wood has to be kept in appropriate humidity and temperature there is a chance of

fungus growth and colour change in wood.

Space, storage system

Design of this warehouse is more complicated compared to other warehouse designs, because

the product is wood. Semi-finished wood needs special care and attention and need more

space than a normal warehouse and needs a systematic storage rack. Warehouse spaces must

also be flexible to accommodate future operations and storage needs as the mission changes.


1.3 AIM AND OBJECTIVE OF THE RESEARCH

Research Aim

The aim of the project is to design a well structured and organised warehouse for the storage

of semi-finished wood materials.

1.4 RESEARCH QUESTIONS

The project is carried out for finding out the results of following questions listed below:

What are the terms and conditions of the government of China in opening a

warehouse?

What are the preservative methods used to prevent wood from fungus growth?

(hazardous chemical storage)

How can we design a warehouse which is suitable for the storage of semi-finished

wood products? (Heated and unheated general warehouses, controlled humidity

warehouses)

1.5 RESEARCH OBJECTIVES

The main objectives of the report are:

To analyse the political issues and formalities

Critically reviewing the preventive methods to treat wood from damages

To understand designing layout of a well-structured warehouse suitable for the wood

products


1.6 PERSONAL INTEREST

The researcher is having a guitar manufacturing unit in China and currently the raw materials

for the product are exported to China. As a future business strategy, the company is planning

to open a warehouse in China in order to store the semi finished wood parts for guitars which

can be stored in aisles and racks to maximize the profit. Moreover, as a Supply Chain

Management student the research will help to add more practical knowledge to the researcher


CHAPTER 2

2. LITERARURE REVIEW

2.1 INTRODUCTION

Warehousing is closely related with the distribution of products and is a much-neglected area

of business study. Effective warehousing process is very important for an organization to

improve its business operations. For the effective and efficient business operations we need to

design a well structured warehouse that describes its needs and uses. The overview of

designing a warehouse and its advantages are discussed and analyzed in this section with

cross checking based on the different views of authors. This part of the work gives an

overview about the importance of designing an effective warehouse in this modern era. Term

„warehousing‟ is used for keeping and handling the material which are the key elements in

our industrial and economic system. (James A. Tompkins, Jerry D. Smith, 1998)

Industrial revolution makes a big change in the concept of production of goods. This resulted

in mass production and changes in concept of manufacturing facilities from receiving to

shipping. Mass production of goods and raw materials drag the world into a new aspect called

warehousing. At the first stage of mass production goods were manufactured according to the

sales forecast. The goods and raw materials that produced according to the forecast were

usually placed in the warehouse of the factory. When the distribution system developed, the

factories began to place their warehouse closer to their targeted market areas. As time and

years passed away the concept of distribution centres also grown beyond their limits. (James

A. Tompkins, Jerry D. Smith, 1998)

Warehousing is either directly or indirectly interlinked with logistics. No warehousing will

happen without logistics operations. Since, from the invention of wheel, man built carts for

the movement of goods and materials. Today we are moving the materials for the

manufacturing area and in distribution of semi-finished and finished materials, on a

demanding sophisticated level. The industrial success came in to reality only by economical

movement of materials and goods. Inventory control, warehouse management and production

control are the key factors that affect the profit of an organization and these can be attained

only by following a proper warehousing methodology. The steps in warehouse methodology

deals with the systematic execution of physical storage and their retrieval activities and

processing of information needed regarding the goods stored. From the view point of material


handling of the warehouse methodology, includes all the functions related with the storage of

goods. From a narrow sense of thinking we can say that, this involves all the movements

happening inside the warehouse. In a broader approach we can say that it involves

transportation linkage from factory to warehouse and from warehouse to market. The bridge

between warehouses to market is linked by common carriers such as railways, trucks, ships,

airlines and so on. Based on this broader aspect a warehouse is considered as „distribution

factory, (Kringel J.R,)

2.2 WHAT IS WAREHOUSING

Warehousing consist of the activities which involves the storage of goods on large scale basis

in a systematic manner and making them available suitably and easily when needed. In other

words, warehousing refers to preserving or holding goods in bulk quantities from the time

when the goods purchase or produce till their actual sale or use. In this industrial era

warehouse was defined as a useful reservoir for storing mass production (Ackerman K.B,

1997). The main function of a warehouse is to facilitate the process of storing and movement

of goods. If mass production is made for a particular product which can sell immediately,

then companies use warehouse to store the surplus stocks until they are needed by the

customers to buy. Warehousing also helps the manufacturer to stabilize the price of the

products and makes availability of the seasonal products without any delay. An effective

warehouse helps a company to reduce the cost transportation and inventory and by which

improves the services to customers. A warehouse can also drain the company‟s resources if

they are functioning in a wrong way. Beyond making the decision about the facilities to be

installed and fixing the location of the warehouse, a company must study and plan out which

type of warehouse is more effective and appropriate. (William M. Pride, O. C. Ferrell, 2011)

2.3 TYPES OF WAREHOUSES

2.3.1 Private Warehouses

The private warehouses are the kind of storage spaces which are owned and managed by

large manufacturing companies and other private peoples for their own use. Large companies

and business firms need large storage spaces on a regular basis and who can afford the

expenses, construction and maintain their own private warehouses. Big companies or

wholesaler may have a chain of warehousing firm‟s different parts in of the country. The


private warehouses are registered and have licensed to private persons and the goods which

are operated by the licensee will only be stored in this kind of warehouses. (Farahani. R.Z

etal, 2011)

2.3.2 Public Warehouses

These are the type of warehouses which are specialized business establishment that provides

storage facilities to the public people who need to store their goods by paying a certain

amount of money. It may be owned by an individual or a cooperative society, but it want to

be registered and need a license from the government. A public warehouse is also known as

'duty paid warehouse' because of the similarity in there functioning.

Public warehouses are very useful to the people who do not have the capability to own their

own warehouse as they can meet their storage needs economically by making use of the

public warehouse, without large investment. Public warehouses provide storage facilities to

small scale manufacturers and business at cheap costs. They also provide facilities to check

the quality of goods by prospective buyers. They also permit grading and packing of goods.

The public warehouses receipts are considered as good collateral securities for borrowings.

(Joel D., etal, 2008).

2.3.3 Bonded Warehouses

These warehouses are licensed by the Government to accept imported goods for storage until

the payment of customs duty. They are usually located closely to ports. They are either

operated or functioned by the Government or work under customs authorities. The goods are

held in a bond and cannot be removed without paying the customs duty to the authorities.

Bonded warehouses are very helpful for importers and exporters. If an importer is in a

situation that he/she can‟t pay customs duty immediately after the arrival of goods he/she can

store the goods in a bonded warehouse until the time he pays the customs duty. He can also

have another option to withdraw the goods in instalments by paying the customs duty in

monthly basis. Goods lying in a bonded warehouse can be packaged, graded and branded for

the purpose of sale. (Joel D., etal, 2008).


2.4 BENEFITS OF WAREHOUSING

Warehouses are mainly used for storage of goods. When the supply exceeds

demand the stored goods are released. On one hand it ensures a normal supply of

goods in the market and on the other hand it helps to stabilize the prices by

matching supply of goods with demand.

Warehouses are denoted as a safe custody for the storage of goods. Businessmen

can minimize the risks happening from loss, fire, theft, damage etc. If the goods

are perishable then it can be stored in cold storage. The goods kept in most of

the warehouse are generally insured to avoid the risk.

Warehouse will provides the facilities for blending, processing, grading, packing

etc, of the goods for the aim and purpose of sale. The prospective buyers have

the freedom to inspect the goods stored in a warehouse.

Warehouses provide a receipt to the owner of goods which contain all the details

of the goods stored in the warehouse. The owner can borrow money against the

security of goods by making an endorsement on the warehouse receipt. By

keeping the imported goods in a bonded warehouse, a businessman can pay

customs duty in installments. (Marketing and Sales: Warehouse, 2010)

2.5 FUNCTIONS OF WAREHOUSING AND WAREHOUSE FUNDAMENTALS

Warehousing is an important aspect of logistics and supply chain management. The designing

of the warehouse must be done in a manner that it satisfies all the requirements of the

customer service policy which spell out the customer response master plan and work supply

master plan, and serve a target stipulates by the supply master plan, and to serve a mission

stipulates by the transport master plan. The warehouse is considered as a service to satisfy all

other functions of logistics and supply chain management areas. Warehousing includes a set

of fundamental activities in common. (Frazelle E.H, 2002)

Traditionally, warehousing is treated as an overhead rather than the profitability of the

manufacturing enterprise. On one hand manufacturing management treats warehouse

management as a necessary element, while on the other hand as a non-essential element of

the manufacturing system. Today warehousing is considered as the bottle neck of the

manufacturing system and emphasized on proper planning and management and is


considered as the most important element of the manufacturing system. (Tompkins J.A,

Smith J.D, 1988)

2.5.1 BASIC WAREHOUSING FUNCTION

SOME OF THE BASIC WAREHOUSING FUNCTIONS ARE AS FOLLOWS:-

2.5.1.1 Receiving raw materials

In this receiving function, replenishment materials coming to the warehouse by common

carriers are unloaded by assuring the quality and quantity. The major functions performed in

these functions are unpacking, inspection of goods against damages, verification of unloaded

materials against shipping invoice, and finally entering the details of receiving products into

warehouse inventory. (Van den berg, 1999) (Alexandre Dolgui, Jean-Marie Proth, 2010)

says that sometimes advance notification may or may not be informed during the arrival of

the material, goods or products, in this case advance notification want to be compared with

the consequent order. In both of these cases, the difference between the delivery and order

should be checked and analyzed. The process of quality control should be performed, once

the material or product reaches its destination and if they have any exception it should be

noted. Finally, the product is checked and registered (commonly RFID device or Bar code

system is used to perform this function) (Gwynne Richards, 2011)

2.5.1.2 Transfer or put away, and transportation resources.

This function is an act of material handling, product placement, location verification. The

transferring of material activities are performed to and from the receiving area of the

warehouse. Receiving function is determined as the interface of the warehouse with the

manufacturing units, business environment, factories and the market in general (Van den

berg, 1999). The selection of equipments used for transporting or transferring the resources

depends on the type of product involved in the warehouse. In this modern era there are

different kinds of conveyors available for the movement of pallets and cases to various parts

of the warehouse. In this modern era transportation process may be completed by using an

automated system which picks the stock or product from the conveyor when items arrive at

an assigned position. For the recognition of the items barcodes or RFID tags can be used

(Alexandre Dolgui, Jean-Marie Proth, 2010). Conveyors are mainly used in warehouses


which having high intensity of item flow. There are also conveyors which do not need any

energy for the operation and they are commonly known as Gravity conveyors. These kinds of

conveyors are more preferable because of the low maintenance cost and investment. Belt

conveyors, skate wheel, roller conveyors are some different type of conveyors available,

these are selected according to the characteristics of item which want to be transported to the

warehouse. The gravity conveyors are equipped with switches and curves to function

different type of functions and paths. (Alexandre Dolgui, Jean-Marie Proth, 2010)

2.5.1.3 Storage

Arranging space for the storage is a fairly complex task, because of the fact that each item

has different shapes and size. Storage identifies the appropriate location and the time

period of materials until they are demanded for the usage of various purposes. (Van Den

Berg, 2000). Storage process includes sorting, transportation of product to storage

locations (which includes the process of putting together the stocks which have same

character or product that needs to be send to same customers). (Alexandre Dolgui, Jean-

Marie Proth, 2010) says some objectives want to be taken into account while selecting

storage equipments they are as follows:

Abbreviate work cycles

Drop in handling cost

Reducing the space of storage

Facilitating deliveries and shipments

Simplifying the flows which helps for avoiding flow crossing

Optimizing the work force and safety of resource

Maximizing the utilization of recourses

Minimizing the energy usage required for the operation of storage system.


2.5.1.4 Order picking

This is a basic service provided by a warehouse to its customers. This process involves

removal of items from the storage to meet the demand of the customers. The correct

organizing of the materials help to minimize the time required to handle the process of order

picking. (Frazelle E.H, 2002). In a warehouse, order picking function is considered as one of

the most important in their warehouse distribution function. Order picking is considered as

the centre of product flow between suppliers and the customers. This function is said to be

the core function where requirements and expectations of the customer are defined and

fulfilled, where stock is allocated and shipping and documentation process are scheduled and

prepared “Order picking is defined as selecting the correct item in the correct quantity from

storage to satisfy the current customer requirements” (James A. Tompkins, Jerry D. Smith,

1998). This means that order picking is considered as the core function of warehouse

activities, where customers are free to select the products at right quality and quantity with

full satisfaction.

2.5.1.5 packing

The process of packing is an important element of the warehousing function. Literally, this

function is not directly connected with the operation of a warehouse but today packing and

unpacking of materials is an unavoidable element in the processing of the warehouse and

logistics operations (Van den Berg, 1999). All the non bulk goods must be packed such that

they can be handled by the automated packing system, and can protect from the damages

happening while transportation (acceleration and sudden breaking, grinding, rocking, shocks,

vibrations etc). They also want to be safe from damages and losses happening because of

environmental factors such as extreme heat and cold, water, rest etc. while packing the goods

appropriate markings, labelling and tagging must be done to identify the goods without any

confusions. The labels must be visible and recognizable (Kent N. Gourdin, 2001).

The packing must show the following: (Ernst F. Bolten, 1997)

The name and address of the shipper

The name and address of the receiver

Warnings of hazardous materials

The product code, identification and description


Protective symbol services, such as temperature limits, flammable

Handling symbols, methods and equipments.

2.5.1.6 Shipping finished good

This function involves all the operations relating to the shipping of a material such as packing

of the merchandise in shipping containers, preparing the documents of the shipping, including

labelling or addressing, bill of lading, packing list, weighting of shipments for determination

of the shipping cost. (Frazelle E.H, 2002). Shipping principles include direct loading (the

reverse of direct unloading), staging in racks and preparation of advance shipping notice. For

fulfilling the entire shipping process we can also add the practices such as: Container

optimization, weight checking, container loading and void fill, automated loading and dock

management these practices will make the process of shipping more qualitative ( drawdE

200wa,ellezEH..H)

2.6 THE NEXT GENERATION WAREHOUSES:

The warehouses of next generation will emphasize on fast movement of materials and goods

rather than efficient storage. The designing of the order pick lines want to be organized in

such a way that fast moving materials can be picked with less amount of effort or personal

risk. Tomorrow‟s warehouse will be designed in a flow-through structure with equipment,

layout and emphasized on people who have flexible and capability of handling quick changes

and need highly systematic and improved transmission capacity of handling information such

that no office workers want to be there in the warehouse. (Ackerman K.B, 1997)

We can see many warehouses in this era which have an excellent performance on delivering,

strongly handling and motivating the work force and having a flexible nature with the change

in markets. But when we look at many other distribution centres we can see that there

performance is very weak, having a weak motivated work force and which have lack of

managerial and leadership qualities which results in delay of the entire processing of the

warehouse and it‟s functioning. Even though the manager works so hard in this kind of firms

his efforts remain fruitless. Ironically, the manager can‟t do anything to find the rhythm of

the organization because of his day to day problem solving. (Van Den Berg J.P, 2007)


These problems relating to warehouse operations can be solved by a new methodology which

helps the managers to make the distribution centre into a best class operation from the current

week situation. This new methodology of operation is called Integral warehouse

management. This model is known as Integral warehouse management because of the reason,

that it considers the warehouse centres as an integral part of the logistics management.

Integral warehouse management system acts as a bridge to the new generation distribution

system in transparency, warehouse management system and collaboration. Integral

warehouse management has two methodologies which distinguish the current methodology

It concentrates on capturing detailed data by using the modern information system

It capitalizes a different way of thinking about the concept of logistics optimization

which focuses and aims on more obvious and clear directions.

Integral warehouse management system use modern information system to collect more

detailed data to evaluate the performance and analysis of the process to align the relationship

between the supply chain and logistics management. And this process also provides for

forecasting the planning, capitalize detailed data and control the methodologies. Moreover

these methods make the warehouse management system more intelligent.

TQM, JIT, KAIZEN, ECR, SIX SIGMA and LEAN (Jan vom Brocke, 2010) techniques

known as the models of current generation logistics seeks to be optimized in obvious

directions. This means that reducing the response times, reducing the inventories,

rationalizing process, and eliminating the errors. These techniques already proved to be

highly successful and more effective in achieving the organizational goals and are highly

recommendable. Integral warehousing management lead not only to reduce inventories, but

to shorten the response time, rationalizing processing steps and elimination of errors and

guides through a positive way when it is needed. (Van Den Berg J.P, 2007)

2.7 FRAME WORK FOR DESIGNING WAREHOUSE LAYOUT.

Designing of a new warehouse management system requires the firm or organization to study

about the current warehousing practices. (Van Den Berg J.P, 2007) knowing and preparing

about the layout is the most important aspect of warehouse design. Warehouse design must

be able to give solutions to several issues and problems that can improve storage facilities in


order to support the operations of the warehouse system. Arrangement of warehouse

functional areas like determination of dock locations input/output points, determining the

dimensions and number of aisle, estimation of space requirements and orientation, making

picking zones and designing the flow of pattern are the most important factors of the design

of warehouse. (Hassan, 2002)

Designing the layout of a warehouse is a difficult task because of some reasons, firstly large

number of design decision which is very difficult to be defined and assembled. Secondly the

number of operations involved such as cross docking, picking, dual comment, benchmarking,

material handling, JIT (just-in-time), serving global market and so on (Frazelle, 2002). Such

operations and the comprehensive design of warehouse layout make the designing

complicated. Thirdly the aforementioned factors and operations interact, and such

interactions should include in the design. (Hassan, 2002)

2.8 STEPS IN DESIGNING THE WAREHOUSE FRAMEWORK

Various steps involved for an orderly designing of an efficient warehouse system are

discussed as follows:

Identifying the purpose and type of warehouse:

Firstly we want to differentiate the warehouses, whether it is a distribution centre, a public

warehouse or a manufacturing distribution centre. The type of the warehouse must specify

for designing the basement of the entire layout. This is done because to avoid un-necessary

requirements. For instance, throughput system is not necessary for a public warehouse so we

must be alert about that to facilitate design. (Jim Rowely etal, 2000) The characteristics and

objectives of the warehouse must be well defined, such as whether it serves global markets,

whether it is performing any value added services or not. So the above case will influence

subsequent steps of design. (Tompkins J.A, 2004)

Forecasting and evaluation of expected demand for warehouse:

As forecasting is a key factor in every organization, we want to forecast the capacity of the

warehouse and its demand, also need to prepare information which can be used in the future

for inventory determination, storage, trends and changes happening in demand patterns,

demand for global and domestic markets, percentage of items ordering in full or partial loads,


changes in demand, determination of seasonal items and there management, volume and

quantity of orders and so on.

Forecasting and analysis will also reflect on operations and affected the designing of the

warehouse. For example, if the number of order is less than what we expected, and then

warehouse can easily find a remedy for batching and picking the ordered items from the

location where it is stored. The products which came under the same batch could be stored in

adjacent or close storage locations foe the easy access. The stocks will have specific

characteristics regarding the colour, smell, contamination, hazard must be studied and treated

and stores separately from other products to reduce distance and pick time. Similarly, the

items which have same bill or same kits want to be identified and treat separately from

others. (Hassan, 2002)

Establishing operating policy

The operational issue wants to be identified early during designing time. Such issue will help

to decide whether to operate warehouse as many as small warehouses which are not

dependent. This type of approaches can be seen in (Harmon, 1993). It helps in avoiding

interference of operations and order mix up which could result in the functioning of a

warehouse as single unit which deals with different products and materials. The different

operations and activities functioning inside the warehouse should be identified for developing

the layout. A decision wants to be made for storing whether the items want to be stored

individually or in batches by charactering the products according to their principles. It is

obvious that establishing operating policy before the layout helps for building a strong layout.

(Hassan, 2002)

Determining levels of inventory

Shaping the levels of inventory for the different kind of items stored inside the warehouse is

been considered as an operational decision, that will help in determining the space inside

warehouse. Determination of inventory levels depends on the analysis of demand and

forecasting. The changes in quantity, quality and timing of the demand of the customer

ordering make confusions in identifying the level of inventory and spacing of the warehouse.

In this particular case, different scenarios of the level in inventory and assignment of storage

want to be evaluated in order to calculate the reasonable inventory level estimating.

(Malmborg and Deutsch, 1988)


Class formation

Class is obtained for the products which based on the demand, compatibility, geographic

destination and physical characteristics. Using of classes help in reducing the distance and

picking time. Distributing the items throughout the warehouse helps to reduce the congestion

of storage. Approaches to obtain such task have similarity (Hwang and Lee, 1988), coding

(Brynzer and Johansson, 1996) and correlation measures (Sharp and Frazelle, 1989)

Department forming and general layout

A warehouse is a place where different activities are happening at a single time. For the

smooth functioning of the organization for each and every function there will have separate

departments. A warehouse must have several departments that are arranged and identified for

the effective and efficient functioning of the organization. The major function of a warehouse

such as storage, packing, receiving, sorting, package and shipping is handled by the main

departments. If several functions are happening in one department, then the number of

departments wants to be reduced for their smooth functioning. For example, picking stations

may be able to perform the function of packing rather that at packing department. After

developing the primary departments, the secondary departments (maintenance and computer)

and the location of the office must be planned and implemented. The arrangement of the

machineries and other equipments using in different departments such as picking, sorting,

packing departments have to be identified and they have to follow a job layout and it has to

be implemented in different sections. (Hassan, 2002)

Storage space division or partition

Allocation of storage space and division is one of the most important functions of the

warehouse management system due to impact on productivity of pickers and congestion,

impact on movement cost and time and throughput (Ruben and Jacobs, 1999). The storage

layout of a warehouse consists mainly of parallel aisles which have goods on the both side of

the aisle. Storage is one of the major functions of the warehouse. The department of the

storage is divided in to mainly picking areas and reserve areas. This is done to facilitate

demand, reducing the movement, operations and size and type of stock. Allocation of space

and location for each products and there quantities are determined by various procedures

(Van Dan Berg, 1999). The reserve and picking areas may also be sub partitioned in to other

sub sections bases on the customer demand and the inventory level of unit load. For example,


we can store pallets and cases by partitioning the reserve area. Simultaneously we can also

sub-divide picking areas to store different items according to their size or movement of items.

(Johnsson and Lofgren, 1994).

Material handling, sorting, and storage system

“Material handling is a system or combination of methods, labour, facilities and equipment

for packing, moving, and storing of materials to meet specific objectives”. (Kulwiec R.A,

1985). Storage, material handling and sorting are the three major activities happening in the

warehouse. These processes are accounted while, designing the aisle, space of storage,

movements happening inside the warehouse, assigning storage of the warehouse, and plays

an important role in designing the layout of the entire proposed warehouse. (Gwynne

Richards, 2011) This is a complicated step which include number of decisions such as depth

of the storage, determining the methods of the storage, assignment of machineries and

equipments to different departments and sections of the warehouse, dimensions and type of

handling different inventories, number, type and capacity of managing equipment,

determining the width, height, number and size of racks and the numbering system, sorting

system, selection, flow system designing, mechanization of all machineries and equipments

are also determined in this process. (Van Den Berg, 1999). The designers must select

compact equipments for reducing the space requirements of the warehouse.

Advantages of material handling:-

Reduction in indirect labour cost and material handling.

Improvement in the productivity

Better use of floor space, facility and productivity

Reduction in transportation cost

Less fatigue to the employees

Improved and better work environment

Reduction in bottlenecks

Greater flexibility

Improved in the safety measures and reduction in the accidents


Improved material flow i.e. reduction in inventory and less backtracking.

(Keshava Chanda Arora, Vikas V. Shinde, 2007)

Disadvantage of material handling:-

Cost of purchasing equipment is high in most of the cases.

Highly professionals or skilled labours are needed for operating almost all type of

material handling equipments

There is a chance of big accidents and hazards, if the equipments are not well handled

and operated

Maintenance cost is very high due to regular maintenance.

High cost in operating and installation cost.

Inventory carrying cost is very high in some cases

(Keshava Chanda Arora, Vikas V. Shinde, 2007)

Designing of an aisle

Determination of the length, width, height, location and number of an aisle is a complicated

and important function of designing the layout of a new warehousing system. The aisle

designed in a warehouse may not have same size. This is done to avoid the picking time and

distance and to improve accessibility and flexibility. Designing of an aisle is said to be a

complicated task because of its impact on determination on space allocation, storage type,

needs and material handling makes the process much complicated and time consuming. For

example, narrow aisles which used for picking the products from the both side of an aisle

during its functioning (Van Den Berg, 1999). At a time wider aisle use only one side picking

from the aisle to eliminate crossing the width of aisle regularly. A short aisle needs only one

picker which helps to avoid congestion where, to a longer aisle more than one picker is

assigned for their smooth functioning. Long aisle is suitable for the operations which are

happening in fixed paths without taking any turns where as a short aisle is suitable for the fast

moving products which are operated by mobile equipments because of this all aspect we can

conclude that designing of an aisle is strongly depend on material handling, storage space and


layout of the warehouse design (Liebeskind A, 2005). So the designers must determine

whether long aisle or short aisle is suitable for the smooth functioning of the warehouse at the

time of creating the warehouse layout.

Determination of space requirements.

Determining the space requirements inside a distribution centre is determined by various

factors such as, , number of departments and offices, size of aisle, level of inventory, height,

width and depth of storage system, size and number of equipments, type and size of sorting

system and so on. Making estimates of the warehouse also depends on overheads, availability

of land, cost of land etc. Wrong estimation of the warehouse space may lead to congestion of

operating space on one side and over space or wastage of space on the other side. So

estimation of warehouse space wants to be made carefully. (Tompkins J.A, 2004) says that

using the method of cross docking, production made in storage location and direct-put-away

we can reduce the space of warehouse at the time of receiving the materials or goods. So

many things want to be taken in to consideration while determining the requirements of the

space. (Hassan, 2002).

Determining the number and location of docks

As warehousing deals with numerous functions it‟s necessary to have many docks in a

warehouse to accommodate the materials coming from different transportation modes. It

which helps for the smooth material handling, avoids delay happening in between, help for

smooth and frequent shipping, help for cross docking without any interference of shipping

operations and it reduces the congestions happening during the stock keeping (Smith and

Tompkins, 1982). We get all these benefits if a warehouse has well structured and organized

docks facilities. Docks want to be distributed over different sides of the warehouse such that

it will help for the smooth functioning and movement of goods flowing inward and outward

directions (Hassan, 2002).

Health and safety

Warehouse is the place where numerous activities are happening at a time. Lot of safety

measures want to be take in to consideration while designing a warehouse. Some of them are

listed below:


Warehouse must need proper ventilation facilities under all circumstance.

Provide fire extinguisher all around the warehouse, fix water sprayers and fire alarms

Need proper exhaust for janitor‟s closets, rest rooms, kitchens, battery charging

rooms, copy areas, etc.

Proper lightings need to be fixed. Allow natural lightings in the areas were possible.

Provide lighting controls, where artificial lights are adjustable according to the

availability of day light.

Install carbon dioxide sensors for monitoring the quality of fresh air when needed.

Try to consider maximum use of natural light.

Minimize HVAC system noise in the places where high sounds are emitted.

Use equipments such as tables, chairs and other furniture are that are ergonomically

approved and are designed for that use.

Design the equipments and furniture‟s that are reflective on health work practices for

eliminating repetitive motions and to prevent from sprains and strains.

Create „sense of place‟, which helps to create a unique character, purpose and sense of

pride, dedication for the personals and the work place community.

(Ed, Acker, 2011)


CHAPTER 3

3. RESEARCH METHODOLOGY

This chapter aims to define the set of methods utilized throughout the research process. This

also includes the selection process of the methods and the case study subject.

3.1 INTRODUCTION

Research -

The practice done by an individual to solve the problem held by an individual or to

understand the terms of the answers for the questions held by another person with respect to

some specific object, individual or subject.

Research methodology chapter begins as the result of completion of the literature review

chapter. The definition of research clearly describes that the individual can respond to the

questions that are raised by him or by the other individuals. The basic reason raised from this

is the importance of the data to carry out the research. Since, data helps to carry out,

understand and prove the validity of the research in the future; the importance, dependability

and requirement of data further increases. Since remembering the data in mind is not reliable

source because it can be forgotten easily. So, keeping data in form of records, files and

backups plan for future use is useful in research work. There are certain methods to collect

the data for the research work.

Basically this chapter of research methodology consists of:

Describing about the data collection methods

Classifications of the data collection methods

Justifications certain methods for collecting data or use of strategy of collecting data

during research work.

3.2 RESEARCH PHILOSOPHY

“Research philosophy is the investigation of particular research opinion made by more than

one authors in their research work (Altinay and Paraskevas, 2008)”.

For the specific research, the collected data in the research work is used to study different

viewpoints that are held by one or more number of researchers. Research philosophy is

classified into three types, which are:


Positivism philosophy

Interpretive philosophy

Phenomenology philosophy

3.2.1 POSITIVISM PHILOSOPHY

Positivism philosophy is the first philosophy of the research philosophy that can be used in

research work among the three classification of the research philosophy. Every individual has

its own unique thoughts; thus, in general different people have different thoughts and views

on different subjects. In this research philosophy, different thoughts in a research are

collected and examined and the result for the research is calculated (Bachman and Schutt,

2008).

The most important reason behind this research is to study the management process in

installation of warehouse in China, with consideration of case study of installation of DONJO

warehouse by STANDARD Company in different countries. Thus, the possibility to study the

warehouse installation can be different according to the studies done by different people. It is

not possible in this study which could be the reason not to use the positivism philosophy in

this research.

3.2.2 INTERPRETIVISM PHILOSOPHY

Interpretive Philosophy –

When the author views are considered and same views of the author are repeated in the

research work without trying any different approach in the research work, describes about

interpretive form of the research philosophy (Blaxter, 2006).

In other words, the data collected using the interpretive philosophy in the research work is not

calculated by using different approach required according to the need of the research work.

Hence, interpretive philosophy cannot be analyzed.

According to the interpretive philosophy, the secondary source describes that the

STANDARD Company have to consider without changing anything in it. As the in depth

study of the information is not supported by the interpretive philosophy, so this philosophy

also will not be considered to be efficient for the research work.

3.2.3 PHENOMENOLOGY PHILOSOPHY

Since the phenomenology philosophy is descriptive in nature, it totally supports the

investigation of core concept in the research work. Lived experience including realistic terms


and hard facts is enabled in a phenomenology philosophy. Unreliable clarifications are not

considered in phenomenology (Altinay and Paraskevas, 2008).

The nature of the phenomenology philosophy is to express the process and it is useful to

study and understand the significance of warehouse management in the business.

The main reasons to use the phenomenology philosophy in this research will be:

The nature of STANDARD Company performance and trying to open warehouse in

China, in addition to the presence of warehouse management in India which is a case

study, and is a realistic study in this research.

Studying the warehouse management in STANDARD Company and its performance

of the analysis on the opening of warehouse in China will also be a descriptive study

of the philosophy.

3.3 RESEARCH APPROACH

Research approach is defined as the implementation or methodology or the advancement in

the performance of the research process. Research approach gives two ways to continue and

complete research:

Questions on the research process.

Research method suitable to the process.

Research approach is further characterized into two groups:

a. Inductive approach

b. Deductive approach

3.3.1 INDUCTIVE APPROACH

Inductive approach for the research work is associated with the observation of the extensive

generalization and theories. The inductive research approach involves observation, pattern,

hypothesis and theory (Schroeder, 2010).

The study about the STANDARD Company opening a warehouse in China is prioritized in

this report. Secondary source will also participate in making the observation and provide

information in this research work. The explanation of various environmental, economical and

political issues related to the construction and opening of warehouse in China are done by

development of the pattern, hypothesis and commencement of the research work, which will

be covered in this approach. Thus for this research, the inductive research approach will be

appropriate.


3.3.2 DEDUCTIVE APPROACH

Deductive research approach is given additional general and particular study concentration. A

hypothesis, observation and confirmation process represents the deductive approach (Wilson,

2010). Deductive approach not only begins by creating or studying the theory, but also

through the observations which is required in the initiation of this research work.

After careful consideration and reading through the approach, it can be summarized that

deductive research approach is not suitable for this research work.

3.4 RESEARCH METHOD

For the research work two forms of data which is available can be collected:

Numerical data

Textual data

The basis for the determination of research method in a research work depends upon the type

of data collected i.e. either textual data or numerical data. Research method observes two

types of data classification methods:

1. Qualitative methods

2. Quantitative methods

3.4.1 QUALITATIVE METHOD

Textual data is collected in the qualitative method. Any data in textual form for example, data

dealing with the behaviour of humans as textual is collected as a qualitative method (Wimmer

and Dominick, 2006). In other words, effects on the individual due to wood protection

methods used in warehouse will be in form of text, thus the above information on human

behavioural can be collected in this research method.

This method will be required and necessary for this study. Such kind of information is

required for this particular study, since all the factors involved in the opening of the

warehouse will be required in this research. Different sectors like administrators of

STANDARD Company, governmental authorities of China, and the private sectors in China

that are associated with company can cause various amount of extra activities in the opening

of the warehouse in China. The influences on the STANDARD Company from the above

individual will determine an indirect effect on this research and on the opening of the

warehouse in China. By considering all the activities occurring above validate the use of

qualitative method for this particular research study.


3.4.2 QUANTITATIVE METHOD

Quantitative method is used to collect data in a measurable or numerical form in this type of

research work (Kumar, 2005).

The research study will deal with the STANDARD industry and specifically focus on the

opening of the warehouse in China. There won‟t be much of the numerical relation or

calculation or information related in investigating the study or concluding the research in

effective manner. By considering the possibilities above, non necessity of quantitative

information is sensed in the study. So, quantitative method will not be used for this particular

research study.

3.5 DATA COLLECTION METHOD

Several sources can be used to collect the information for the research work. The data for

research work can be collected from the internet or from the newspapers. There are several

other similar resources from which data can be collected for the research work.

There are numerous ways available to collect the information for the research work (Stevens,

2005). So the way in which the information id collected for the research work can be

categorized into two types such as:

Primary data collection method

Secondary data collection method

However, the classifications of data collection methods are done on the basis of the source

from which the data is gathered by the individual in a research work.

3.5.1 PRIMARY DATA COLLECTION METHOD

Primary data collection method is the method in which the data is collected in a research

through direct involvement of an individual and participants in the research collecting the

information (Kurtz, 2009).

The time consumption in primary data collection method is more because the researching

individual is collecting the data from the participants directly. So, the accuracy of the data

gathered in this data collection method is more particularly in this type of research study. The

ways in which primary data could be collected in a research study in this data collection

method is through conducting interviews and surveys. Observations of the participants in the

research work can also be used to collect primary data in the research. The main source of


primary data collection method can be the information gathered from the questionnaires that

is generated by performing surveys and interviews with the research participants. In other

words, questionnaire is the best way to collect information so, surveys and interviews will be

conducted with the research participants.

The ongoing investigation is the research work done on the opening of the warehouse in

China. Primary data collection methods will take more time in collecting data than the

secondary data collection method. STANDARD industry and people associated to the

company both in India and China will provide the research information and data. As

conducting an interview with the STANDARD industry officials to get the research

information is more time consuming, although personal contact is supported by the primary

data collection method. The problems that can be faced in researching about warehouse are:

Low and regulations in China, environmental conditions and official requirements in

opening of the warehouse.

Issue in identifying the actual industry officials to respond to the survey or to the

requirements in opening the warehouse in China.

Hence, primary data collections will not only be the fully dependent data, other sources are

also needed for verify the research study.

3.5.2 SECONDARY DATA COLLECTION METHOD

Other sources that are used to collect the information for research are newspapers, internet,

journals, articles, company websites and books. Secondary collection data method is the

technical term given to the method by which the data from the above sources are collected

(Hair, 2006). These sources of providing data and information for a research work are called

as secondary data collection source. The information already exists in secondary data

collection source form, so the accessibility of the information can be observed in these data

collection sources. Because of this reason, secondary data collection method does not take

much time to collect the information for research work (Kotler and Armstrong, 2010).

The ongoing investigation is the research work done on the opening of the warehouse in

China. Also, studying the methods used to protect the woods from getting damage by various

factors like transportation, pest, fire, atmosphere, weather etc. STANDARD industry officials

in India can help in gathering the data for the above research work, as the company has many

other overseas warehouses. Surveying and interviewing can also be used to gather the

research information. Surveys and interviewing can consume a lot of time in collecting


information. It is also possible that other people of the company could help in filling up the

survey questionnaire.

The secondary data collection method is in which the available information is collected from

the secondary source and will enable the research person to gather information more quickly.

In this method the verification of the collected data by comparing the information of the

secondary data collection source from another secondary data collection source.

The phenomenology philosophy supports in the achievement of the reliable information in a

research work since it does not consider any kind of unreliable explanations. The possibility

and ability to cross check the information from the other secondary resources, verifies the

reliable and realistic nature of the information gathered during the research work. Because of

this reason, secondary data collection method can also be utilized in this research study.

3.6 DATA ANALYSIS METHODS

3.6.1 DESCRIPTIVE ANALYSIS

The basic plan to implement the descriptive method in a research work is to have a

knowledge concerning the present trend and the circumstances of the market. Each function

and factors are linked to the specific phenomenon and is considered by the descriptive

research (Kumar, 2005). The term in which already planned design is related to the

surrounding atmosphere helps in explaining some of the particular features of the specific

group and offers to have a well built argument linked to the perceptions made by the

consideration of the descriptive research. Surveys, observations, secondary data, diverse

views and panel discussions are some of the tools that can be useful in performing the

descriptive research analysis.

The research shows that, the STANDARD industry is trying to open a warehouse in China

which is a case study investigating the conditions and requirements required to open a

warehouse. Studying the present trend and market situation are the prime concern of the

market. This first opening of the warehouse in China will be the prime and hard investigation.

But, these investigations will also help to modify and to relate the applied theories and

practices in opening the warehouse for opening more warehouses if required. Because of

these reasons, the descriptive research will be useful for this research work.


3.7 RELIABILITY AND VALIDITY

Observation if the steadiness in the evaluation is the reference of the dependability in the

research work. In other words, reliability of the research study or the test work is only

considered when the research work provides similar outputs in a regular manner (Briggs and

Coleman, 2007). The information achieved in the research work is trustworthy, can be

confirmed to be true only if same type of research work have similar outputs when they are

compared with the output of the present research work.

Secondary sources have provided the data for this research work. To gather the information

for this research work secondary data collection method is selected. The reliability of the data

which is collected from secondary sources using secondary data collection method can be

verified if same data is approved by more than one source. This is the only way to verify the

presence reliability present in the information in secondary research. Same technique is used

in this research study to verify the data. Numerous secondary sources are used to collect the

data for this research, which enables the achievement of the reliability in this research study.

The means to provide validity to the research work is by offering validity to the research

output with the help of several descriptive analyses used in the research. Initially presence of

long time validity must be confirmed to the provision of the validity in the research (Rubin

and Babbie, 2009).

The research work, examines the practice of different management practices in the

transporting the wood from India to China in easy and best way and also by considering the

case study of opening the warehouse in China for providing products to customers on time.

The use of the information, gathered from the trusted websites in this research work also

assists in enhancing the validity of this research.

3.8 STRENGTH AND LIMITATIONS OF THE RESEARCH

The experience bothering the standard industry is that it is trying to open warehouse by

studying the cases of warehouse opened in other countries. And the method that will help

them to know the reality in the experience is phenomenology philosophy. This method can

also help in increasing the descriptive knowledge of the warehouse. The approach that

initializes this research process will include the specific details like


study of warehouse condition

law and regulations in China

effect of environment on wood

These are usually witnesses in inductive approach.

The use of another method called qualitative research method will help to understand the

human behavioural characteristics of standard industry authorities and the reasons that lead

the authorities allowed opening of the warehouse in China in certain method. The behaviour

of the authorities is the cause of the performance of warehouse in a particular way in China.

This type of data can only be gained by adopting the qualitative method in the research

analysis.

Secondary data collection method is the quickest way to gather the information in this

research work. Primary data collection method didn‟t allow the personal contact with

standard industry officials and collect the research information in a personal level from the

authorities.

3.9 SUMMARY

The basic aim of the research analysis is to study the Standard industry, and their effort in

installing and opening of the warehouse in China. The type of data collection method used in

classification is secondary data collection method among the two data collection methods.

And this method will be used in the research analysis to get the information for the research

work. However, on the basis of research approach the selection will be made for the data

collection method. Hence, the use of the research approach is justified in this research

analysis.

The manner in which data is collected and the research method which will state the type of

data that will be collected in this research possesses similar amount of importance.


CHAPTER 4

4. DATA ANALYSIS

4.1 INTRODUCTION

This chapter give a brief idea what will be the specification of our warehouse and what legal

formalities we have to fulfil for building a new warehouse in China. As well as it is also

going to discuss how to manage the warehouse using different methods of warehouse

management? This chapter will also describe about the treatment we are going to use for

goods (wood); to prevent them from getting spoiled because of humidity or fungus. For

getting more practical point of view in this chapter an interview with manager of

STANDARD Company which has warehouse of similar products is also discussed in brief in

this chapter.

4.2 STANDARD Company Profile

STANDARD Company is warehousing Company. Company has around 10 warehouses in

India and 4 Warehouse in China. Company‟s China branch is new and has started their

business just 2 years ago in 2009. In India STANDARD Company is operating since last 10

years in southern part of India especially in Kerala, Tamil Nadu and Karnataka. Company

even has its 2 warehouses one in Himachal Pradesh and Madhya Pradesh. Madhya Pradesh

and Himachal Pradesh warehouses are basically warehouse for raw wood directly from

forests. These two are also base for sorting out woods and sending them to different branches

in India. And wood is even supplied to some local retailers. All other 8 warehouse have

storage of wood for specific purposes like furniture‟s and other art or luxurious goods.

STANDARD Company‟s Chinese branch is dealing with warehousing of costly wood for

artistic and luxurious goods.

Standard Company is not a very old firm but it has managed all the problems in two totally

different countries India and China, which have totally different traditions, working strategy,

and environment, legal formalities etc. very well and come as a successful firm in the field of

warehousing.

Now STANDARD Company‟s DONJO warehouse is a warehouse specially for storing wood

for guitars; these woods are imported from India, Pakistan, Nepal and even from some parts

within China and stored in the warehouse taking care of environmental conditions.


All the raw wood is transported from all the three countries using a mixed transport system of

trains and roads. As China is not connected to any of these countries by the train route so 1st

by local transports these wood are transported to border and then after unloading and again

loading into local trains the wood are transported to the city railway warehouse from where

wood are transported using Trucks to the warehouse DONJO. This combined process is too

long and a lot of time is wasted in loading and unloading each time at the point of change of

transport. Besides this time loss the distance travelled is also too long and a lot of time is

spent in transport. Basic factors on which transport method is selected are as follows:-

How much big order is suppose to be transported?

If order is on regular basis like after 1 month then most chances are that order will be

big and transportation via trains would be preferred. On other hand if order is not too

big then road transportation may also be considered.

When we need the orders?

If Company have enough stock for now and it can wait for some time for next

delivery than any slow transportation system may also be considered like sea but in

case Company is running out of stock and need delivery as soon as possible then

faster method of transportation would be preferred.

How far is the supplier warehouse?

Company is also considering the distance between the suppliers location relative to

warehouse location.

Cost of transportation

Cost of transportation is most influencing factor while deciding the mode of

transportation as it will add up to the cost of product and may result into company‟s

failure in market.

Orders are given on regular bases like monthly or twice a month as the demand is not too

variable and orders are not given for a specific type off wood but as a whole mixed order for

all different types of wood. Like if one kind of wood is required then order cannot be placed

immediately and company wait till they are able to give a specific amount of order.

Purchasing is done keeping in mind that wood is being transported mainly via road transport

and longer the distance travelled costlier will be the product. Suppliers are selected on the

basis of their past record with Company and in market. Most of the suppliers are regular.


During transport there are a lot of chances of wear tear of wood and a lot of damage may be

due to rain; so the wood are covered using a waterproof cloth. This cloth is tightly wrapped

around the wood so that high velocity winds do not displace the cloth.

Loading and unloading of wood are done manually each time. A lot of time is wasted in

border crossing operations and changing of transportation. Each time when the order arrives

it is inspected at the receiving point and after doing the specific colour coding is stored in

warehouse. Wood is sorted on the basis of following factors:-

- Humidity factor

- Damaging percentage

Humidity factor decides that how much processing is required before storing the wood. The

processing means is it necessary to dry the wood or not. Sometimes wood is dried using solar

heat only while sometimes other methods like smoking are also used.

Damaging percentage is deciding that wood is under acceptable range or not. And if

acceptable then does we need to cut wood to store it or it can be directly send for coding

process. Most of the damaged woods are sending to wastes to be used in smoking kind of

processes.

STANDARD Company is using colour coding to mark the wood. So that wood can

recognized by the seeing the colour. Different companies are using different coding systems

but all warehouses of STANDARD Company are using standard coding designed and this

coding is displayed on different places in each warehouse.


Colour coding used by company is shown in table 1.

Sr. No. Wood Type Colour Code

1 Mahogany

2 Ash

3 Basswood

4 Maple

5 Agathis

6 Poplar

7 Zebrawood

8 Wenge

9 Padouk

10 Rosewood

11 Lacewood

12 Bubinga

13 Walnut

14 Spruce

15 Koa

16 Alder

Table 1 colour coding

Woods are stored in specific layout. Warehouse is further divided into individual sections

where different categories of products are stored. The warehouse has over 600 codes of

stored products, distributed into 4 individual sections. The study considers one of these

sections, where the number of codes is around 100. Coding is displayed using table 1 in brief

but it is only a simplified form of coding as it only differentiate the wood according to its

type but in storage different quality of woods are further coded and stored according to the

state of wood like it is of best quality without any damage, better rashes, no wastage if used,

dry, free from fungus etc.

The most frequent values for the size of the panels are 3.66×1.83m, and the thickness is

between 6cm and 25cm. Instead of using shelves, the products are piled one on top of the

other using small chocks between the packages. Great attention is paid to the alignment of the

items in each pile, to avoid sheet warping. Warping can easily occur due to the small

thickness of the packages and the large load they take.

http://en.wikipedia.org/wiki/Mahogany

http://en.wikipedia.org/wiki/Fraxinus

http://en.wikipedia.org/wiki/Basswood

http://en.wikipedia.org/wiki/Maple

http://en.wikipedia.org/wiki/Agathis

http://en.wikipedia.org/wiki/Poplar

http://en.wikipedia.org/wiki/Zebrawood

http://en.wikipedia.org/wiki/Wenge

http://en.wikipedia.org/wiki/Padouk

http://en.wikipedia.org/wiki/Lacewood

http://en.wikipedia.org/wiki/Bubinga

http://en.wikipedia.org/wiki/Walnut

http://en.wikipedia.org/wiki/Spruce

http://en.wikipedia.org/wiki/Koa

http://en.wikipedia.org/wiki/Alder


Figure 1 layout of STANARD Company.

The studied warehouse section consists of three parts: two of them have 12 front piles each

and the third part has 6 front piles (Figure 1). The piles are 7m high and the products are

stored in up to 4 depths of pile levels. The main aisle is used by the Clarks to gain access to

the front piles. The aisle is wide enough to allow the Clarks to remove the items of the front

piles and to retrieve items stored in the deeper levels. Each part of the section contains

different groups of products.

4.3 PROBLEMS IN STORAGE OF WOOD

Wood in warehouse is kept in controlled conditions so that it could be protected from the

various atmospheric effects and protect from getting damage from many other reasons.

Humidity and temperature in the warehouse are kept under controlled. Because these

can cause wetting of and wood and swelling of the wood. To deal with this company

uses traditional methods used in India. In the method woods are passed through the

coal smoke, which helps in soaking the water contents attached with the woods.

Chimney is installed on the top of warehouse so that waste flue gases can exit from

the warehouse. Chimney height is about 100 meters; so that waste gases and smoke

can easily escape to higher atmosphere.

Even some Fungicide Wood Preservative is used to control the fungus and wood

worms. Use of mixed chemical remedial treatments intended to control both insects


and fungal decay is also normal. Many supposed woodworm infections were treated

with potentially highly toxic cocktails of solvents, fungicides and insecticides. Liquid

solutions of chemical treatments intended to control woodworm infection and decay

were generally applied by spray or brush application. Special masks are provided to

workers who are spraying these chemicals and national health and safety regulations

are considered while applying pesticides.

Fire is the major problem in the wood industry warehouses. The various methods used

to protect wood from other factors like coal smoke can cause fire in the warehouse. So

it is necessary to carry out the processes carefully. The fire extinguishers should be

installed in the warehouse and only experienced person should use the wood treatment

processes.

To protect the woods from the humidity, water, other atmospheric factors the wood

can be completely wrapped or laminated into a plastic wrapper. As plastic is non

biodegradable and water does not affecting it at all, so wood can be protected from

few factors easily and cheaply.

4.4 SUMMARY

Data analysis describes about the usage and verification of the data used in opening of the

warehouse in China. STANDARD Company‟s DONJO warehouse is a warehouse specially

for storing wood for guitars; these woods are imported from India, Pakistan, and Nepal and

even from some parts within China and stored in the warehouse taking care of environmental

conditions. Orders are given on regular bases like monthly or twice a month as the demand is

not too variable and orders are not given for a specific type off wood but as a whole mixed

order for all different types of wood. STANDARD Company is using colour coding to mark

the wood. So that wood can recognized by the seeing the colour.

Wood in warehouse is kept at controlled humidity and temperature for this purpose Company

is using traditional methods like smoking by coal and scrap wood. Chimney is implemented

on the top of warehouse so that waste flue gases can exit from the warehouse. Liquid

solutions of chemical treatments intended to control woodworm infection and decay were

generally applied by spray or brush application. Special masks are provided to workers who

are spraying these chemicals and national health and safety regulations are considered while

applying pesticides.


CHAPTER 5

5. INTERVIEW QUESTIONS

Focusing areas for interview:-

- To find out about consequences faced while opening new warehouse in China.

- Purchasing strategy of STANDARD Company.

- Different methods of management implemented and success rate achieved.

- Transportation methods in use in Company and problem faced by Company in any of

the processes if any.

To find out more about the warehouse management and difficulties faced in introducing a

new warehouse in a new country like China, an interview was conducted of the CEO,

management staff and employees of STANDARD Company. Whole process of interview

take around 30-40 minutes and in this limited time some important questions were asked to

the authorities. A brief explanation of interview is explained as below:-

1. As an international warehouse corporation, do you find any difference in

opening warehouse in a new country like China as compare to India?

As explained by Plant Manager that although they were opening warehouse for same

products as they were already dealing in India still legal formalities in China are quite

different from India. In different countries legal formalities are different; even

environment is not same in both countries. So they have to face various legal and

environmental problems while they were in starting process.

2. What were basic problem (legal) faced while opening a warehouse in China?

Plant manager told that firstly any foreigner cannot open a warehouse on his name so

they have to find a local company named Lee Corporation who helped us to clear this

legal barrier. We want to open a warehouse near to market and transport circuit but

finding a big space for plant was also a big challenge. As all the prime location were

already occupied or under residential area so cannot be used for warehouse purpose.


3. From where your most of wood is purchased and what are the considerations

while placing orders?

Purchase manager told that they are importing wood from India, Pakistan, Nepal,

Russia and many local parts of China. Orders are placed when they need a specific

amount of wood. They try to order with a great care taking into mind that next time

order cannot be placed for only single kind of wood variety; as it add the cost of

transportation. Although regular suppliers are preferred still new suppliers are

considered if good price and quality is offered by them.

4. What if a specific kind of wood is finished and you need it in urgent to complete

requirement of a customer?

According to purchase manager, in that particular case company use local suppliers

and even though cost is higher still they are preferred because ordering and supply of

wood from regular suppliers take a long time for delivery. Company‟s purchasing

department try to prepare order keeping in mind old market demand and predicted

analysis of market demand. Although exact prediction is not possible so some time

stock goes high for one kind of wood.

5. What are the treatments for wood once they are in warehouse?

According to one of the employee first logs are sorted out on the basis of their

condition like dryness factor and damaged goods. Then comes the processing where

first selected wood is dried using various methods and then colour coding is done

under the supervision of warehouse manager. After that wood is send to specific

location from where they belong.

6. What are the problems related to storing wood for long time?

According to employee woods are sometimes wet and that‟s why needed to get dried.

Smoking is done using scrap wood and this also result in keep temperature high in

warehouse to avoid moisture. But special care is taken in whole process as our

product is also wood and a little carelessness may result into fire hazards. Sometimes


when wood are old there is sometimes chances of wood worms in logs; to avoid such

cases regularly pesticides are used in warehouse every month. During the time of

spray warehouse is kept close for 1-2 days as there may be chances of health hazards

due to poisonous air. Every staff member who works in this time wear masks

provided. And the wood which is already erupted by worms is sending to scrap.

7. What are the methods of transport used and how is order tracked?

According to purchase manager transport methods are trains and big truck Lorries and

he also mentioned that there is no specific method used for tracking the order. They

rely on past experience that how much time is taken in order delivery and if any

problem is faced truck drivers contact via phone. And small offices are opened at each

point of change of transport like near international border so that they can manage the

loading and unloading process.

8. What methods are used for loading and unloading and why?

According to purchase manager loading-unloading is done manually as labour is

cheap and easily available in China and nearby countries. Company has not given

priority to the use of cranes and other loading unloading methods as it will result into

high capital investment into the company structure and add burden on the accounts of

Company.

9. Why different methods of supply chain like JIT or benchmarking not used?

According to Plant manager JIT is not possible as we have to import material from far

places and transport methods are also not too reliable. And benchmarking was used

while stabling the warehouse with older warehouses of company and time to time

changes, suggested by headquarter is also considered and if appropriate implemented

in the plant.


5. 1 OUTCOMES OF THE INTERVIEW

The interview concludes that:

1. Legal documentation must be carefully considered. As China has communist government,

sometime it is hard to work through law and regulations. So, legal documentation must be

carefully studied and completed before opening of the warehouse.

2. Environmental conditions must be studied before opening the warehouse. This must be

done so that the wood stored in it must be protected from the effects arises from the

environmental factor. This will also help in understanding the factors that have to be

controlled in the warehouse. Also distinguish necessary and unimportant factors in the

warehouse.

3. Health and safety factors are one of the important factors. The process done to protect

wood from various conditions includes the usage of harmful chemical and substances which

can cause serious damage to property and the life of an individual. So, health and safety

factors are installed in the warehouse and proper training will be provided the staff to use

them at the time of an emergency.

4. Transportation of wood is from India to China can be done through road and from sea. Sea

is good way in which woods can be totally closed in a container and is protected from

environment, but road transportation is the best selection because it is cheapest, easiest and

most commercial method to transport good from India to China. Since sea transportation

could take long time to reach the good also increases the capital investment. So, road

transportation is the best method to transport wood.

5. Stock amount also called as inventory and is also important thing to consider. As keeping

wrong stock can disappoint the customer and cause high investment of capital. Right amount

of stock will increase the sale and attract more customers.


CHAPTER 6

6. DISCUSSION

As we can see from the interview of the authorities of STANDARD company that some of

the basics of warehousing industry are used by STANDARD firm and so we can also used in

our proposed warehouse but we also have to consider that there were a few point where

STANDARD is deviating from basics; so we have to reconsider those facts:-

Close down of plant for 1-2 days due to pesticides spray.

No specific study of local suppliers.

No proper tracking system for orders.

A lot of time and money wastage during loading and unloading at different points.

Unable to use JIT and other specific tools of management.

No proper method for sorting out the wood logs before storing.

Wastage of wood due to eating away of worms.

We can see that DONJO WAREHOUSE are keeping close their warehouse due to pesticides

spray for one day; in the world of high competitive world close down of warehouse may be

hazardous for business. Instead of this they may search for some alternative methods.

Even though they are importing their major stock from far away suppliers in other countries

still they should focus on local suppliers also. They should do supplier analysis and divide

them according to grading and further supplier relation tactics should use.

Orders are not tracked. There may be any problem in travelling and an exact estimation is not

possible without tracking. There are also chances of theft during transportation.

Even though labour is cheap, manual operations waste a lot of money and time in the process

of loading/unloading. Transportation is done using old traditional ways. No permanent

solution is found out.

JIT is totally ignored and no use of lean is implemented in warehouse.

Sorting process is done on experience bases of the person responsible. There are a lot of

chances of manual error and miss-arrangement of goods.

No account is taken of wastage due to humidity or worms eating away. A proper account

should be taken and if in a proper type of wood or wood from a particular supplier has more


problem then others; it should be taken into account next time selecting suppliers and grading

them.


CHAPTER 7

7. CONCLUSION

The main part of the research study is to define the problem, find the solution and method and

describe the ways to execute the solution. It also includes the explanation of the data

collection techniques and ways to collect information. Generally research finding are

considered too time consuming and hectic, while the selection and application of research

processes are considered to be exciting and efficient. The success behind the good answers

and conclusions is achieved through careful selection of the process from the most

appropriate set of research methods.

The beginning of the research method is done by defining the research topic and describing

the importance of keywords, key concepts and those helping to complete the research topic

consecutively determining the relevant literature for the research work. After defining and

understanding these literatures, the existing facts and information in the related field will be

determined from different aspects. After this, the next stage describes the methods used and

clarifies the conceptual definitions by determining the methods and ultimately applying them

to prove the appropriate definitions.

7.1 OBJECTIVES OF THE RESEARCH

To analyze the political issues and formalities.

This objective is about the governmental formalities and political issues in the opening of the

warehouse in China. The study, research and analysis of every factor covered in this

dissertation verify that the warehouse has covered all the formalities and requirements, and

can be open safely in China.

Hence, this objective has been covered and achieved.

Critically reviewing the preventive methods to treat wood from damages.

Damage of the woods depends on the various factors. Many of the factors are mention in the

data analysis chapter and almost all are covered in future recommendation chapter. From

future recommendation chapter, wood problems can be studied and removed effectively from

the warehouse.


Hence, it can be concluded that the objective has been achieved.

To understand designing of a well-structured warehouse suitable for the wood

products.

A well designed structure of the warehouse includes various management tools like lean and

quality management to make it much more effective and efficient to use. This warehouse

design in the dissertation has management tools so that it should operate effectively but time

to time changes are required for increasing the efficiency of the warehouse.

Hence it can be said that this objective is achieved for current time but in future there

will be some modifications to increase the efficiency.


CHAPTER 8

8.0 RECOMMENDATION

On the basis of our finding from literature review and case study of STANDARD Company

we recommend that suppliers should be graded on their performance bases; both permanent

and emergency suppliers should be studied. Local suppliers can be developed by helping

them and sharing information with selected suppliers.

As wood is one of the oldest and most flexible materials available. The best ways to protect

and preserve the wood from various factors are:

1. Dry Rot

a. Apply Ecobor II Gel to end grains and any susceptible surfaces

b. Apply Borotreat 10P, dissolved in water, by spray to timber and masonry

2. Wet Rot

a. Apply Ecobor II Gel to end grains and any susceptible surfaces

b. Apply Boracol B40/1 Paste and Boron Rods to timbers in contact or embedded in

masonry.

3. Woodworm

a. Mild damage - treat with Borotreat 10P dissolved in water

b. Moderate damage - de-frass & treat as above, and with Ecobor II Gel

c. Severe damage - cut out damaged section, repairs and treat with Borotreat 10P,

Ecobor II Gel and insert Boron Rods.

4. Fire Protection

a. Fire Retardant Wood Coatings - S92 water borne fire retardant coating systems are

available for interior and exterior use.

b. Fire Retardant / intumescing wood coatings - S42 fire retardant and intumescing

coating systems offer protection of floors (upgrading joists and boards to 30 minutes),

decorative panelling and ceiling board.

c. Protective measurements will be taken to protect them from the fire during smoking

process done during protecting woods from air moisture and termites.

5. Weather Protection

Natural finishes will protect the wood from such disfigurements and are used where

the principal reason is the appearance of the exterior timber. All types of natural


finishes are less durable than opaque coatings so maintenance intervals will be

shorter.

6. Conveyor belts can be used to transport wood logs from one point to other in a warehouse

which would be quick and safe. Less maintenance of the conveyor belts also add to the

feature that the overall capital investment can be reduced.

7. As mentioned above proper colour coding or indications must be used for differentiating

different types or size of the wood.

8. Pallets can be used to raise the wood from the ground to protect it from the ground

moisture also the pallets can be painted differently for the distinguishing the wood part.

9. Lean management methodology can be used to organize the wood in the warehouse so that

the space of the warehouse could be used efficiently. Also this will increase the stock

placement in the warehouse.

10. Containers as in sea transportation can be used, to transport wood from India to China.

This is because firstly track of the material can be kept, secondly it is safest way and

thirdly most important the woods can be protected from the environmental conditions

while transporting from sea rather than through road transportation.


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