Warehouse: The Backbone of Supply Chain


Today in the era of production, we all strive day and night to refine our processes. But after a point of time we feel that the growth has started slowing down even if our efforts are not. Something is holding on the processes. There can be a lot of factors. Warehouse is one of the major factors that prevents scaling of the operation after an extent.

According to Wikipedia, Warehouse is a commercial building meant for storage of goods. Warehouse can can serve different purpose at different point in the supply chain. In the beginning its a raw material storage, in the middle of a processing acts as a buffer stock. at the end of process as finished goods storage facility, at dockyard acts as a convergence point to meet the minimum bulk for different destinations.

Below we will talk about warehouse and its importance in apparel industry, scalability and how to remodel an existing one. Apparel sector is one of the few sectors which faces very high changeover in terms of end product as well as raw materials. For one casual shirt the total number of different types of raw materials on an average is around 40. For a warehouse controlling 6 factories with 5000 unit capacity each with style changeover per two days will have to dispatch 72,00,000 items which is a mixture of 720 unique trims and accessories. And as per current industry average in Indian scenario companies are having anywhere between 2-3 months of raw material stock. This leads to a staggering 32,400 unique items and 32,40,00,000 individual trims. Now the numbers looks big enough to concentrate on.

Why this situation arrived?

When we start a plant, we plan according to the current or near future capacity warehouse. Then we start to indulge in attacking more on the process. As we all love to attack on value adding process to make them better and faster rather than attacking more on non-value adding activities which constitutes a major part of our process. We keep adding machines, plants start stressing the warehouse. this problem gets worsen if there is an off-site warehouse. The process and infrastructure designed to serve 40,000 pieces a week gets stretched to 1,00,000 Pieces. In the mean time this problem becomes a cancer.

I don’t have infrastructure to expand warehouse. What now?

Most of the time we think that there is no other solution but to expand our infrastructure. But wait!!!!!! Are you sure? Most of the time the answer is no, you don’t need to expand but your current infrastructure can suffice with little tweaks.

Keep a vigil on the items sent by the warehouse, are they getting delivered in lots, instead of a bulk. Are there a lot of cases of reordering the materials? Then this is the time to concentrate on warehouse as they are unable to send material in one go as the search time is more. The reorders might be happening because one item is there but is stored in such a way that it cannot be traced. Now its the time to move to next step.

Form a team for the project. The project team should consist of a high level manager assisted with few young executives or Interns.Start with capacity calculation of the existing infrastructure. But the question is in what terms and how we will calculate the capacity of warehouse. It can be done by taking the median style and then doing the volume calculation. Trims and Fabric calculation should be done separately. Here we will be talking in terms of trims only.

At first we calculate the volume of each box of the trim available with the quantity available. There is an example table given below:-

Quantity Cubic Inches
Button
1728 46
Tag
100 33.69
Label
2000 96
Sticker
2060 170.625
Tape
1830 1920
Gum Tape
65 267.947
Polybag
1200 2160
Thread
10000 52.5

When we are done with this calculation, we will take out the the volume of one unit trim. then multiply the result with the number required in one shirt. e.g. get the volume of one button then multiply it seven times as one half sleeve shirt contains 7 buttons.

Then after adding up all these figures we will get the volume required to store one garments raw material.

The next step is to calculate the total volume capacity.  For which we will add-up the volume available to us either in the form of racks or slots or containers.  Then decrease the value of total space by 20% margin as all the trims receive are not going to be in cuboid shape to cover all the volume available. Then divide the total volume after margin by unit volume. Congrats you got your capacity.

My capacity  is saturated as per my buffer period requirement. Now what?

No worries, still we can free up space and provide you the increased per week dispatch quantity.

Lets say if you process 50000 garments on 4 different locations with every garment having 40 trims.  and you keep a buffer of 60 days then your requirement will be:-

Number of garments X number of locations X number of trims per garment X number of buffer days

50000X4X40X60=480lakh unit trims

so this is your current capacity. But you are planning to add a super big plant with 25000 unit garments capacity each day.

So the new requirement will be :-

50000X4X40X60 + 25000X1X40X60 = 540lakh trims unit

But seeing current math you will say we need to expand the warehouse to 150% of present capacity or build a new one. But not. Lets say you some how you managed to reduce your buffer period stock by 15 days. so now your buffer stock keeping period is 45 days. Lets recalculate the capacity:-

50000X4X40X45 + 25000X1X40X45= 405lakh trims unit.!!!!!

Surprised?????? you still have 75 lakh unit capacity left, this means roughly 2000 Garments per day can be handled via the same warehouse with no modification at all.

Coming up in next post:- How to allocate spaces and redesign the process in warehouse and reduce the buffer period.

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