Warehouse An Overview Project 4b5t42

WARE HOUSING -AN OVERVIEW KHUZEMA LOKHANDWALA ROLL NO: HPGD / JL15 / 3032 SPCIALIZATION: SUPPLY CHAIN MANAGEMENT

WELINGKAR INSTITUTE OF MANAGMENT DEVELOPMENT & RESEARCH YEAR OF SUBMISSION: FEB, 2017

Page | 1

APPENDIX I CERTIFICATE FROM THE GUIDE This is to certify that the Project work titled Ware Housing -An Overview is a confide work carried out by Khuzema Lokhandwala ission No. HPGD/JL15/3032 a candidate for the Post Graduate Diploma examination of the Welingkar Institute of Management under my guidance and direction.

SIGNATURE OF GUIDE:

NAME : Somesh Balla DESIGNATION : Manager, Operations ADDRESS : MOL-IPS, Skyline Icon, Marol Village, Andheri (east)

DATE: 20-02-2017 PLACE: MUMBAI

Page | 2

UNDERTAKING BY CANDIDATE

I declare that project work entitled “Ware Housing -An Overview” is my own work conducted as part of my syllabus. I further declare that project work presented has been prepared personally by me and it is not sourced from any outside agency. I understand that, any such malpractice will have very serious consequence and my ission to the program will be cancelled without any refund of fees. I am also aware that, I may face legal action, if I follow such malpractice.

(Khuzema Lokhandwala) Signature of Candidate

Page | 3

Table of Content

SR.NO

INDEX

PG.NO

1.

Introduction

5

2.

Approach to TQM

7

3.

History of TQM

9

4.

TQM soft factors

13

5.

New Methodology

21

6.

Principles of TQM

24

7.

The Concept of continuous improvement by TQM

25

8.

Implementation – Principles & Processes

26

9.

Steps in managing the transition

28

10.

Generic strategy method for implementing TQM systems

30

11.

12 steps to implementing Quality Management System

32

12.

How to implement Total Quality Management

38

13.

Elements of TQM

44

14.

Why should a company adopt TQM

50

15.

Conclusion

58

16.

Bibliography

60

Page | 4

1) Introduction A warehouse is a place where different goods are stored or accumulated for a temporary period. It created time utility. The need for warehouses arises out of the lack of adjustment between times of production and times of consumption of goods. At present time the goods are produced for in advance of demand. So before the goods are bright in the market, they should be stored. It is the warehouse which stores the goods from the time of production to the time they are sold. In this way warehouse removes the hindrance of time between the places of production and consumption.

A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities, towns and villages.

They usually have loading docks to load and unload goods from trucks. Sometimes warehouses are designed for the loading and unloading of goods directly from railways, airports, or seaports. They often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks. Stored goods can include any raw materials, packing materials, spare parts, components, or finished goods associated with agriculture, manufacturing and production. In Indian English a warehouse may be referred to as a go-down.

What is Warehousing? Warehousing is the act of storing goods that will be sold or distributed later. While a small, home-based business might be warehousing products in a spare room, basement, or garage, larger businesses typically own or rent space in a building that is specifically designed for storage.

Page | 5

2) Uses and Importance of Warehousing

Many goods are not produced regularly at the point where they are wanted for consumption and they must be stored from the time of production until they are wanted by the consumer, if they are to be used in satisfying human wants. Goods produced at a distance from the consumer must be transported to the consumer. In order to ensure on even supply, a stock of such goods must be maintained near the consumers as protection against delays and uncertainties of transport and to permit transport in economical units. Many agricultural goods produced seasonally are supplied to consumers more of less evenly throughout the year. Grain, Cotton, Tobacco and Sugar furnish can be stored for several years without any deterioration. The demand for some products is irregular. In such cases storage may be called into use so that production can be more regular.

If factories producing such goods are to be operated throughout the year, the goods produced in the “off months” must be stored until they are wanted by 1he consumers. Storage involves expense, but much expense in often less than the extra cost of providing buildings, machinery and labour to produce seasonal products as needed. Moreover, production and transport may be interrupted by fire, flood, strike, cold or storm. Storage is a safeguard against such risks.

It offers facilities to the traders or merchants to get loan from the credit agencies on the goods stored in the warehouse. The credit agencies will be in a position to give loans by the transfer of warehouse receipt, which is a negotiable instrument of title.

It offers goods facilities for the transfer of ownership of goods warehoused there in without the actual transfer of goods simply by transfer of warehouse warrants with the endorsement of the owner thereon.

It removes the hindrance of time which would otherwise be involved in obtaining possession of the goods from the places of their production

Page | 6

3) HISTORY The origins of the warehouse are difficult to pinpoint. Early civilizations relied on storage pits rather than large structures to protect seeds and surplus food. Sociologists like Alain Testart have argued that these early storage techniques were essential to the evolution of societies.

Some of the earliest examples of warehouses that resemble the buildings of today are Roman horrea. These were rectangular buildings, built of stone, with a raised ground floor and overhanging roof to keep the walls cool and dry. Roman horrea were typically used to store grain, but other consumables such as olive oil, wine, clothing and even marble were also stored inside.

Though horrea were built throughout the Roman empire, some of the most studied examples are found in or around Rome, particularly at Ostia, a harbor city that served ancient Rome. The Horrea Galbae, a warehouse complex in the southern part of ancient Rome, demonstrates that these buildings could be substantial, even by modern standards. The horrea complex contained 140 rooms on the ground floor alone, covering an area of some 225,000 square feet (21,000 m²). As a point of reference, less than half of U.S. warehouses today are larger than 100,000 square feet (9290 m²).

As attested by legislation concerning the levy of duties, medieval merchants across Europe commonly kept goods in household storerooms, often on the ground floor or one or more storeys below the ground. However, dedicated warehouses could be found around ports and other commercial hubs to facilitate overseas trade. Examples of these buildings include the Venetian fondaci, which combined a palace, warehouse, market and living quarters for lodging travelers. A number of representative medieval warehouses can also be seen in King's Lynn, U.K., where a complex of buildings, including dwelling-houses, shops, countinghouses and warehouses, once served the Hanseatic League.

During the industrial revolution the function of warehouses evolved and became more specialised. Some warehouses from the period are even considered architecturally significant, such as Manchester's cotton warehouses.

Page | 7

4) Warehousing Elements

Whether the purpose is strictly storage or storage plus order fulfilment, warehouses use specific elements that help manufacturers, distributors, and retailers monitor inventory and store it safely. An overview of basic elements includes: 

Shelving and rack systems that offer maximum storage capacity and easy product access.



A climate control system for the product being stored. This is particularly important for frozen products or those requiring refrigeration, including certain pharmaceutical or laboratory products, and others that degrade if exposed to too much heat.



Inventory control software that tells the product owner – who isn’t necessarily the building owner – where all individual units are in the system at all times.



Equipment that can move products from point A to point B – forklifts, pallet jacks, bins that hold products for orders, and conveyor belts, for example.



Shipping supplies for order fulfilment.



People who load products into a warehouse and others (“pickers”) who fill orders in a true distribution center, plus those who manage the facility and operation.



Security to protect stored products.



Access to cost-effective transportation to bring products in or move them out as orders are fulfilled. That often means easy access to interstates, rail lines, or airports.

Page | 8

5) Functions of Warehousing:

5.1. Storage: This is the basic function of warehousing. Surplus commodities which are not needed immediately can be stored in warehouses. They can be supplied as and when needed by the customers.

5.2. Price Stabilization: Warehouses play an important role in the process of price stabilization. It is achieved by the creation of time utility by warehousing. Fall in the prices of goods when their supply is in abundance and rise in their prices during the slack season are avoided.

5.3. Risk bearing: When the goods are stored in warehouses they are exposed to many risks in the form of theft, deterioration, exploration, fire etc. Warehouses are constructed in such a way as to minimise these risks. Contract of bailment operates when the goods are stored in wavehouses. The person keeping the goods in warehouses acts as boiler and warehouse keeper acts as boiler. A warehouse keeper has to take the reasonable care of the goods and safeguard them against various risks. For any loss or damage sustained by goods, warehouse keeper shall be liable to the owner of the goods.

Page | 9

5.4. Financing: Loans can be raised from the warehouse keeper against the goods stored by the owner. Goods act as security for the warehouse keeper. Similarly, banks and other financial institutions also advance loans against warehouse receipts. In this manner, warehousing acts as a source of finance for the businessmen for meeting business operations.

5.5. Grading and Packing: Warehouses nowadays provide the facilities of packing, processing and grading of goods. Goods can be packed in convenient sizes as per the instructions of the owner.

Page | 10

6) Importance of Warehousing in the Development of Trade and Commerce: Warehousing or storage refers to the holding and preservation of goods until they are dispatched to the consumers. Generally, there is a time gap between the production and consumption of products. By bridging this gap, storage creates time utility.

There is need for storing the goods so as to make them available to buyers as and when required. Some amount of goods is stored at every stage in the marketing process. Proper and adequate arrangements to retail the goods in perfect condition are essential for success in marketing. Storage enables a firm to carry on production in anticipation of demand in future.

A warehouse is a place used for the storage or accumulation of goods. It may also be defined as an establishment that assumes responsibility for the safe custody of goods. Warehouses enable the businessmen to carry on production throughout the year and to sell their products, whenever there is adequate demand. Need for warehouse arises also because some goods are produced only in a particular season but are demanded throughout the year. Similarly, certain products are produced throughout the year but demanded only during a particular season. Warehousing facilitates production and distribution on a large scale.

Page | 11

7) Benefits from Warehouses:

7.1. Regular production: Raw materials need to be stored to enable mass production to be carried on continuously. Sometimes, goods are stored in anticipation of a rise in prices. Warehouses enable manufacturers to produce goods in anticipation of demand in future.

7.2. Time utility: A warehouse creates time utility by bringing the time gap between the production and consumption of goods. It helps in making available the goods whenever required or demanded by the customers. Some goods are produced throughout the year but demanded only during particular seasons, e.g., wool, raincoat, umbrella, heater, etc. on the other hand, some products are demanded throughout the year but they are produced in certain region, e.g., wheat, rice, potatoes, etc. Goods like rice, tobacco, liquor and jaggery become more valuable with the age of time.

7.3. Store of surplus goods: Basically, a warehouse acts as a store of surplus goods which are not needed immediately. Goods are often produced in anticipation of demand and need to be preserved properly until they are demanded by the customers. Goods which are not required immediately can be stored in a warehouse to meet the demand in future.

Page | 12

7.4. Price stabilization: Warehouses reduce violent fluctuations in prices by storing goods when their supply exceeds demand and by releasing them when the demand is more than immediate productions. Warehouses ensure a regular supply of goods in the market. This matching of supply with demand helps to stabilise prices.

7.5. Minimisation of risk: Warehouses provide for the safe custody of goods. Perishable products can be preserved in cold storage. By keeping their goods in warehouses, businessmen can minimisex the loss from damage, fire, theft etc. The goods kept in the warehouse are generally insured. In case of loss or damage to the goods, the owner of goods can get full compensation from the insurance company.

7.6. Packing and grading: Certain products have to be conditioned or processed to make them fit for human use, e.g., coffee, tobacco, etc. A modern warehouse provides facilities for processing, packing, blending, grading etc., of the goods for the purpose of sale. The prospective buyers can inspect the goods kept in a warehouse.

7.7. Financing: Warehouses provide a receipt to the owner of goods for the goods kept in the warehouse. The owner can borrow money against the security of goods by making an endorsement on the warehouse receipt. In some countries, warehouse authorities’ advance money against the goods deposited in the warehouse. By keeping the imported goods in a bonded warehouse, a businessman can pay customs duty in installments.

Page | 13

8) Type of Warehouses: There are three types of warehouses as described below:

8.1. Private Warehouses: The private warehouses are owned and operated by big manufacturers and merchants to fulfill their own storage needs. The goods manufactured or purchased by the owner of the warehouses have a limited value or utility as businessmen in general cannot make use of them because of the heavy investment required in the construction of a warehouse, some big business firms which need large storage capacity on a regular basis and who can afford money, construct and maintain their private warehouses. A big manufacturer or wholesaler may have a network of his own warehouses in different parts of the country.

8.2. Public Warehouses: A public warehouse is a specialised business establishment that provides storage facilities to the general public for a certain charge. It may be owned and operated by an individual or a cooperative society. It has to work under a license from the government in accordance with the prescribed rules and regulations. Public warehouses are very important in the marketing of agricultural products and therefore the government is encouraging the establishment of public warehouses in the cooperative sector. A public warehouse is also known as duty-paid warehouse. Public warehouses are very useful to the business community. Most of the business enterprises cannot afford to maintain their own warehouses due to huge capital Investment. In many cases the storage facilities required by a business enterprise do not warrant the maintenance of a private warehouse. Such enterprises can meet their storage needs easily and economically by making use of the public warehouses, without heavy investment. Public warehouses provide storage facilities to small manufacturers and traders at low cost. These warehouses are well constructed and guarded round the clock to ensure safe custody of goods. Public warehouses are generally located near the junctions of railways, highways and waterways. They provide, therefore, excellent facilities for the easy receipt, despatch, loading and unloading of goods. They also use mechanical devices for the handling of heavy and bulky Page | 14

goods. A public warehouse enables a businessman to serve his customers quickly and economically by carrying regional stocks near the important trading centres or markets of two countries. Public warehouses provide facilities for the inspection of goods by prospective buyers. They also permit packaging, grading and grading of goods. The public warehouses receipts are good collateral securities for borrowings.

8.3. Bonded Warehouses: Bonded warehouses are licensed by the government to accept imported goods for storage until the payment of custom duty. They are located near the ports. These warehouses are either operated by the government or work under the control of custom authorities. The warehouse is required to give an undertaking or ‘Bond’ that it will not allow the goods to be removed without the consent of the custom authorities. The goods are held in bond and cannot be withdrawn without paying the custom duty. The goods stored in bonded warehouses cannot be interfered by the owner without the permission of customs authorities. Hence the name bonded warehouse. Bonded warehouses are very helpful to importers and exporters. If an importer is unable or unwilling to pay customs duty immediately after the arrival of goods he can store the goods in a bonded warehouse. He can withdraw the goods in installments by paying the customs duty proportionately. In case he wishes to export the goods, he need not pay customs duty. Moreover, a bonded warehouse provides all services which are provided by public warehouses. Goods lying in a bonded warehouse can be packaged, graded and branded for the purpose of sale.

Page | 15

9) India’s warehousing industry The size of the Indian warehousing industry (across commodities and modes) is pegged at about INR560 billion (excluding inventory carrying costs, which amount to another ~INR4,340 billion). The industry is growing at over 10% annually.

Multiple business models exist within the warehousing industry. The key segments can be represented as: 

Industrial/Retail warehousing: s for ~55% of the total market



CFS/ICD: ~14% share



Agri warehousing: 15% share



Cold stores: ~16% share

Current warehouse industry size with sub segments in FY13

Page | 16

9.1. Industry/retail warehousing Industrial/Retail warehousing has a market size of ~INR310 billion in FY13 and it has been growing at a CAGR of 10%–12% over the last few years. Demand for industrial warehousing space is estimated to have grown from around 420 million sq. ft. in FY11 to 475 million sq. ft. in FY13, at a CAGR of 6%.

Significant growth drivers: 

Growth in GDP and changing demographics



Demand for high-end services and infrastructure



Growing external trade



Rising share of organized retail



GST implementation

Key players: DHL, Safexpress, Continental Warehousing, Indo Arya, MJ Logistics, Allcargo, Nippon Express, etc. are the major players in industrial warehousing.

Page | 17

9.2. Liquid storage The liquid storage mainly refers to the storage of liquid bulk such as crude, petroleum products, chemical and edible oil. Liquid bulk cargo handled at ports has been growing at a CAGR of 5%–6% between FY10 and FY13. Demand for liquid storage space is increasing in India amid increasing traffic and limited existing capacities. Currently, the utilization of commercial tank farms in India is between 75% and 80% in FY13.

Significant growth drivers: 

Increased edible oil consumption



Shifting consumer preferences



Improved operational efficiencies



High utilization levels for tank farms



Development of private airports

Key players: Major players in the commercial segment include IMC Ltd., Vopak India, Kesar Terminal, Ganesh Benzoplast, Indian Oil Tanking, Aegis Logistics, Sealord

Page | 18

9.3. Agri-warehousing Agri warehousing s for ~15% of the warehousing market in India, or ~INR80–85 billion, in FY13. It has been growing at a 10%–12% rate over the last 3 years. Agri warehousing capacity in India is 110–120 million metric ton (MT), and it has been growing at a CAGR of 8%–10% over the last 5 years.

Significant growth drivers: 

Growing annual agriculture production



Increased private sector intervention



Improved agri warehousing infrastructure



Standardized warehousing operations as per the Warehousing (Development & Regulation) Act



Subsidy schemes



Tax incentives

Key players: Key public sector players include Food Corporation of India (FCI), Central Warehousing Corporation (CWC) and 17 State Warehousing Corporations (SWCs). The remaining 30% of the capacity is primarily held by unorganized small godown players. A few large national-level players have emerged in this field over the last decade owing to the available capital subsidy. These include National Bulk Handling Corporation Ltd., National

Collateral

Management

Services

Ltd.,

Adani

Agri

Logistics,

Star

Agriwarehousing & Collateral Mangement Ltd., Shree Shubham Logistics Ltd., Ruchi Infrastructure Ltd., Guru Warehousing Corporation, Paras Warehousing and LTC Commercial.

Page | 19

9.4. Cold stores Cold stores for ~16% of the total warehousing industry and it estimated to worth a ~INR90 billion industry. The cold storage industry is expected to grow at ~15% per annum on a sustained basis over the next 5 years, with the organized market growing at a faster pace of ~20%.

Significant growth drivers: 

Increase in organized retail



Growing GDP



Increasing population



Improving per capita consumption



Healthy growth of niche categories such as chemicals, pharmaceuticals, etc.



Government incentives

Key players: Snowman, Gati Kausar, Cold Star, ColdEx, Kelvin cold chain, RadhaKrishna Foodland, MJ Logistics, Dev Bhumi Cold Chain, Fresh and Healthy Enterprise, etc., are the major organized players in the industry.

Page | 20

9.5. Container handling and storage CFS/ICD s for ~14% of total warehousing market in India and is estimated at around ~Rs.75-80 bn in FY13 in India and has grown with a CAGR of 10-15% over last 3 years.

Significant growth drivers: 

Growth in containerized cargo



Opening up of container rail transport



Government incentives

Key players: The government run Container Corporation of India (CONCOR) continues to be the largest player operating 48 terminals which handle EXIM cargo, while 14 others handle domestic traffic only.

Page | 21

Conclusion We can conclude that the above eight elements are key in ensuring the success of TQM in an organization and that the supervisor is a huge part in developing these elements in the work place. Without these elements, the business entities cannot be successful TQM implementers. It is very clear from the above discussion that TQM without involving integrity, ethics and trust would be a great remiss, in fact it would be incomplete. Training is the key by which the organization creates a TQM environment. Leadership and teamwork go hand in hand. Lack of communication between departments, supervisors and employees create a burden on the whole TQM process. Last but not the least, recognition should be given to people who contributed to the overall completed task. Hence, lead by example, train employees to provide a quality product, create an environment where there is no fear to share knowledge, and give credit where credit is due is the motto of a successful TQM organization. TQM encourages participation amongst shop floor workers and managers. There is no single theoretical formalization of total quality, but Deming, Juran and Ishikawa provide the core assumptions, as a “…discipline and philosophy of management which institutionalizes planned and continuous… improvement … and assumes that quality is the outcome of all activities that take place within an organization; that all functions and all employees have to participate in the improvement process; that organizations need both quality systems and a quality culture.”  The findings of this study indicates that the company adopts a multiple stakeholder philosophy for successful execution of TQM that squarely values the customers, employees and community.  TQM is based on the strategic plans of the company and expectations of its stakeholders.

Page | 22

 The organization implements a number of TQM tools, and the entire production and service departments strive to implement these tools.  The mission, vision and policies of the organization are consistent with those of TQM.  All the employees have accessibility to TQM training and the company has initiated a number of reward schemes to press forward the TQM implementation.

TQM is not a system, a tool or even a process. Systems, tools and processes are employed to achieve the various principles of TQM

Page | 23

Bibliography 

https://www.isixsigma.com/methodology/total-quality-management-tqm/introductionand-implementation-total-quality-management-tqm/



http://tqmcasestudies.com/



Ishikawa Kaoru (1985) what is Total Quality Control: The Japanese Way Englewood’sCliff, NJ, Prentice Hall.



Deming W. Edwards (1986) Out of the Crisis Cambridge, MA, MIT Press Hill Stephen and Wilkinson Adrian (1995) 'In Search of TQM' Employee Relations 17 (3): 9- 26.



http://asq.org/learn-about-quality/total-quality-management/overview/implementingtqm.html



http://quality-management-tools.com/baldrige_criteria.png.



Smith, AK, 1993. “Total Quality Management in the Public Sector.” Quality Progress, June 1993, 45-48.

Page | 24