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An Overview Of FMCG Industry And Warehousing IT Essay

The FMCG (Fast Moving Consumer Goods) industry is extremely competitive. Consumers have high needs on price and quality, and are progressively disloyal to brands, quickly choosing another type of brand or product if the other offer appears better. The recent rise of private-label goods has resulted in increased competition within the FMCG industry. A focus on bringing high volume products at lower prices to the marketplace has created better requirements on all stars. Producers must distinguish their products and quickly bring them to advertise. This has spurred the go up of several more product variants and a recurrent replacement of products, in order to attain the best positioning in today's market.

Manufacturers must change and be able to produce products in smaller batch sizes to gain the challenge on the shelf. It's important to really have the freshest product. Additionally, demand for FMCG can be very seasonal, meaning manufacturers must be very flexible to produce different goods. It also means that fast time to market with an creativity is vital to succeed customers. An extremely fast installation and installation of a production lines is necessary to achieve this.

Since products are consumed shortly after they are simply produced, it is imperative to keep production uptime at its high all the time. Any stay in creation can cause unfilled racks and lost market show. So series uptime must be on a high level and MTBF (Mean Time Before Failing) must be so long as possible. Who buys a broken or dented product? Consumers contain the to expect good quality and easily reject a harmed or dented product. Products and presentation are not permitted to be damaged through the developing process.

In the FMCG industry, better production logistics solutions are major drivers of output development. Warehouse can play a key role in the built-in logistics strategy and its own building and retaining good interactions between supply chain partners.

Warehousing affects customer support stock-out rates and firm's sales and marketing success. A warehouse smoothens out market source and demand fluctuations. When source surpasses demand, a demand warehouse stores product in expectation of customers' requirements when demand surpasses provide you with the warehouse can speed product movements to the customer by accomplishing additional services like marking prices, packaging products or final assembling etc.

Warehousing can be an crucial part of any logistics system, where they can be actively involved to feed the demand of inbound and outbound of resource string. Warehouses should perhaps be better regarded as undertaking sorting and not stocking products. The warehouse is a connection between designer and customer. Warehouses are prepared space for the storage space and handling of goods and materials with the appropriate equipment equipped. The actions of warehouses include vehicles consolidation, break bulk, product blending, cross-docking, security against contingencies, smoothing of supply chain and provide value added services.

Warehouses can be called distribution centres as well. Most companies set up distribution centres to execute just-in-time idea to boost the customer service level. This is to organize better between the interconnection of manufacturers and consumers in resource chain. Warehouses are also needed to perform broadband in term of circuit time performance and to achieve zero problems in term of inventory errors in supply chain logistics. However, warehouses have enforced 2 to 5% on the price of goods sales. Lessening the price tag on warehouses but in between increasing performance of warehouses has become an important business concern.

Warehousing can be described by three functions: i) acquiring goods from a source; ii) holding goods until they may be needed by a customer (internal or external); iii) retrieving the products when requested.

Storing material for an internal customer implies the need for work-in-process storage space, whereas stocking goods for an exterior customer may imply the need for completed products safe-keeping. However, the functions of warehousing stay the same and successful warehouse layouts must accomplish the next objectives, regardless of materials being stored:

maximize the use of space,

maximize the use of equipment,

maximize the utilization of labor,

maximize option of all items,

maximize protection of all items.

Although the objectives of warehouse layout and operation are often recognized, warehouse design problems tend to be complicated by a sizable types of products needing storage space, varying regions of required storage space and drastic fluctuations in product demand. Optimum methods to warehouse layout problems often look at a single goal (e. g. take full advantage of floor space utilization) and/or give a solution to a static problem. Warehouse design problems are further complicated by choice storage space methods and equipment.

Need for Warehousing

Warehousing is essential due the next reasons.

(i) Seasonal Production- You understand that agricultural commodities are harvested during certain times, but their consumption or use takes place over summer and winter. Therefore, there's a dependence on proper storage space or warehousing for these commodities, from where they could be supplied as so when required.

(ii) Seasonal Demand- There are certain goods, which are demanded seasonally, like woollen clothing in winters or umbrellas in the rainy season. The production of these goods takes place throughout the year to meet up with the seasonal demand. So there is a need to store these goods in a warehouse to make them available at the time of need.

(iii) Large-scale Creation - In case there is created goods, now-a-days development takes place to meet the existing as well as future demand of the products. Manufacturers also produce goods in huge volume to take pleasure from the advantages of large-scale creation, which is less expensive. So the completed products, which are produced on a sizable scale, need to be stored properly till they may be cleared by sales.

(iv) Quick Supply - Both commercial as well as agricultural goods are produced at some specific places but consumed throughout the country. Therefore, it is vital to stock these goods close to the place of usage, so that without making any delay these goods are made available to the consumers at the time of their need.

(v) Continuous Creation- Continuous production of goods in factories requires enough supply of raw materials. So there's a need to keep sufficient quantity of stock of natural material in the warehouse to ensure ongoing production.

(vi) Price Stabilization- To maintain a reasonable level of the price of the goods in the market there's a need to keep sufficient stock in the warehouses. Scarcity in way to obtain goods may increase their price in the market. Again, excess production and supply may also lead to land in prices of the product. By maintaining an equilibrium of supply of goods, warehousing leads to price stabilization.

Types of Warehouses

On the basis of Ownership:

i. Private Warehouses - The warehouses that are owned and monitored by the manufacturers or stock traders to store, exclusively, their own stock of goods are known as private warehouses. Generally these warehouses are made by the farmers near their areas, by wholesalers and sellers near their business centres and by manufacturers near their factories. The design and the facilities provided therein are based on the characteristics of products to be stored.

ii. People Warehouses - The warehouses that are set you back store goods of everyone are known as general public warehouses. Anyone can store his goods in these warehouses on repayment of rent. An individual, a partnership company or a company may own these warehouses. To start out such warehouses a licence from the federal government is required. The federal government also regulates the functions and procedures of the warehouses. Typically these warehouses are used by manufacturers, wholesalers, exporters, importers, government agencies, etc.

iii. Federal government Warehouses -These warehouses are owned or operated, managed and controlled by central or status governments or open public corporations or local authorities. Both authorities and private businesses could use these warehouses to store their goods.

Central Warehousing Organization of India, Talk about Warehousing Firm and Food Company of India are examples of agencies maintaining government warehouses.

iv. Bonded Warehouses - These warehouses are possessed, managed and handled by administration as well as private agencies. Private bonded warehouses have to acquire licence from the government. Bonded warehouses are used to store imported goods for which import responsibility is yet to be paid. Incase of imported goods the importers are not allowed to take away the goods from the plug-ins till such obligation is paid. These warehouses are usually managed by dock authorities and found near to the ports.

v. Co-operative Warehouses - These warehouses are possessed, managed and handled by co-operative societies. They offer warehousing facilities at the most cost-effective rates to the participants of their culture.

On the basis of benefits became aware:

Benefits recognized from tactical warehousing


(5 basic monetary benefits) (Five basic service benefits)

a) Loan consolidation 1) Place Stock

b) Break large 2) Assortment

c) Cross dock 3) Mixing

d) Processing/postponement 4) Production Support

e) Stock pilling 5) Market Presence

Economic Benefits

Economic Benefits effect when overall logistical costs are reduced by utilizing by a number of facilities. It is not difficult to quantify the profits on return of an monetary benefit because it is shown in a primary cost to cost trade-offs.

Service Benefits

It may or may not reduce the cost. A warehouse justified on service basis allows improvement in the time and place capability of overall logistical system. It is difficult to quantify the profits on return of such an advantage because it includes cost-to-cost trade-offs. Such a service would be added only when the net effect would be profit-justified.

On the foundation of locations/positions

1. Market-positioned warehouses

Market-positioned warehouses are located near the customers and marketplaces (point of product intake) with the objective of providing them. These generally have a huge variety and low level of what to service local requirements. Such warehouses reduce cost by giving place power. A Market-positioned warehouses functions as a variety point for the merchandise of distant organizations with the causing accumulations of product offering as the resource source for retail inventory replenishment. This approach allows large and cost-effective shipments from the manufacturer with lower-cost, local travel providing service to specific suppliers. Market-positioned warehouses may be owned or operated by the organization or the store (private warehouses), or they might be an independent business providing warehouses service for revenue (community).

2. Manufacturing-Positioned Warehouses

Manufacturing placed warehouse are located near the manufacturing facilities in order to support production on the inbound aspect and to help assortment-creation and shipping and delivery on the outbound part. Improve customer services and processing support achieved through type of warehouse which acts as the collection point for products needed in processing customer requests and material necessary for manufacturing.

3. Intermediately-Positioned Warehouses

Intermediately-positioned warehouses are those located between developing and market-position warehouses. These help in consolidation of assortments for shipments from different creation facilities. A firm may have many manufacturing facility located, for financial reasons, nearby the sources of raw material. Under these conditions the cost-effective warehouse may be at some intermediate point.


Automated Warehouse - With developments in computer and robotics technology many warehouses will have automated capabilities. The level of automation ranges from a tiny conveyor belt transporting products in a small area all the way up to a fully automated facility where only a few people are had a need to handle storage space activity for a large number of pounds/kilograms of product. Actually, many warehouses use machines to handle practically all physical syndication activities such as moving product-filled pallets (i. e. , programs that hold large amounts of product) around properties which may be several stories high and the space of several football areas.

Climate-Controlled Warehouse - Warehouses handle storage of several types of products including those that need special handling conditions such as freezers for keeping iced products, humidity-controlled environments for delicate products, such as produce or plants, and dirt-free facilities for managing highly delicate computer products.

Distribution Centre - There are some warehouses where product storage is considered a really non permanent activity. These warehouses serve as things in the distribution system at which products are received from many suppliers and quickly shipped out to many customers. In some cases, such as with distribution centers controlling perishable food (e. g. , produce), the majority of the product enters in the first morning and it is distributed by the finish of your day.

Characteristics of Ideal Warehouses

Any warehouse is said be a perfect warehouse if it possesses certain characteristics, which receive below:

i. Warehouse should be located at a convenient place close to highways, railway stations, international airports and seaports where goods can be packed and unloaded easily.

ii. Mechanical appliances should be there to launching and unloading the products. This reduces the wastages in handling and also minimizes controlling costs.

iii. Adequate space should be accessible inside the building to keep the goods in proper order.

iv. Warehouses meant for preservation of perishable stuff like fruits, vegetables, eggs and butter etc. must have cold safe-keeping facilities.

v. Proper agreement should be there to safeguard the goods from sunlight, rainfall, wind, dust, dampness and pests.

vi. Sufficient parking space should be there inside the premises to assist in simple and fast launching and unloading of goods.

vii. Round the clock security design should be there to avoid theft of goods.

viii. The building should be built in with latest fire-fighting instruments to avoid lack of goods scheduled to open fire.

Steps in building warehouses for FMCG goods.

1) Goal setting.

Before you design the warehouse, it is better to understand what your warehousing needs are and arranged some goals for the new design.

Is your primary objective to reduce your warehouse costs, or even to offer better customer service (e. g. , faster shipping and delivery or delivery of products)? Perchance you simply want to get the most space you can out of your service at the cheapest price possible.

The Goal setting techniques should be in align with the business's objectives. For example FMCG consumer durable company (Sony, LG) whose aim is to offer good service with their customer. The Logistics Manager should design bigger warehouse to keep more stocks and shares and deploy materials equipment controlling for faster shipment of goods.

2) Information gathering and analysis.

Now that you will be aware of your targets, it's time for a fact-finding mission about your operation. You'll want to assemble information regarding:

Types of items which must be stored. For instance Hindustan Unilever manufacturing food products like Tea, espresso, Kwality Glaciers cream, Annapurna Atta and Toiletry products like Domex, Vim bar, Rin etc. Inside the warehouse foods should be kept individually from toiletry products. Warehouse Administrator should follow the guidelines issued by Food & Medication Expert while stacking the meals items. Within the FMCG company freebies are provided along with what to promote sales. HUL may plan to give regular Cricket bat autographed by Sachin Tendulkar during IPL cricket match along with Annapurna Atta to market their products. In such case the warehouse need to stores not only Annapurna Atta but also cricket bats.

Frequency and level of shipments and deliveries. Items like Tea, Rin, Vim club will have high consistency and huge volume of shipments and deliveries whereas Items like Annapurna Atta and Domex will have low regularity and low volume shipments and deliveries.

Month to month fluctuations in inventory. Demand for Kwality glaciers cream fluctuate regarding to season. During summer months the demand for Snow cream is high and hence the warehouse should keep more inventory in cold storage area and during Winter the ice cream sales will be less and therefore one should keep low inventory.

Projected data for progress in the business is likely to change storage area needs. Warehouse storage area is organized not and then meet current level requirement but also future expected progress for next two to three years. If the business project good growth for existing products and plan for new product launches in the coming years the Logistics Director should plan to have sufficient space at warehouse to meet up with the future development plan.

Keeping current warehouse structure plan is important. In the event that you plan to continue use of certain equipment or functions in new warehouse you may require to include these details in your brand-new statement, as well as including any safeness concerns for the procedure.

3) Design planning.

You have to generate the new design after gathering all the info on your company's warehousing space and requirements, as warehousing needs are greatly differ, there are many different storage models/options to support every type of item. It's important to consider different options and choose the best storage methods as well as the utmost reliable design for your space.

Layout plan also needs to include

product type (size, weight, sound / liquid/ gas, perishable),

storage type (Vertical or Horizontal) and

the material handling equipments.

If your products are marginally heavy in aspect like UPS/Inverter and stored in racks, it require Fork lift for speed storage / retrieval and movements. These fork lift up require adequate passing (aisles) in the warehouse for movements. Again collection of fork lift (manual or Electric handled) depends after the product characteristics and the kind of storage. In the event that you keep stocks in vertically (level) rack you might require electrically managed fork lift to lift the stocks and options from the elevation that involves more investment on equipment and require less investment on space usage credited to vertical storage area pattern. If you keep shares in Horizontal rack you might require manually operated forklift which require less investment in machine and require more investment on space utilization credited to horizontal safe-keeping.

If you plan to get warehouse in major locations like Bangalore, Delhi, Mumbai where square foot (Sq. Ft) space cost is more, then you can work out ideal cost by selecting various option (i) by choosing vertical safe-keeping facility with Electrically controlled fork lift or (ii) by choosing horizontal storage space facility with manually operated fork lift up and choose the most benefitted model.

If your warehouse procedures are more complex anticipated to different product character [example Reliance deals with Fresh stores for Fruit and vegetables require cold safe-keeping facility to protect fruit and vegetables, Reliance Mart for consumer goods require basic warehouse with huge space, Petro Products and chemicals and require specialized storage facility], there are companies that specialize in warehouse products and equipment often offer planning services along with quotes for the materials required. Their understanding of warehousing equipment, design and protection is a major asset during this process.

4) Implementing.

Implementation is major job. Setting up or re-organizing an existing warehouse can be a very big job. Fortunately, many professional equipment companies offer this within their services as well and they able to assist you in proper execution of the design you have chosen. They can also suggest better method to adopt which will be beneficial to the business.

5) Maintenance.

Part of the strategies for your warehouse must include the way the facility will be taken care of on a continuing basis. Procedures for taking regular inventory, continuing excellent safety steps and maintaining equipment in top condition are essential to keep your company running well.

It is clear that we now have a lot of factors involved in an efficient, cost effective warehouse design that maximizes available space for storage.

Points to be considered while considering a warehouse location (Selecting location of your warehouse):

(Market/ Creation/ Intermediary Positioned)

Cost of the warehouse

Order routine time

Desired customer service level

Nature of the merchandise (seasonal/ perishable)

Market service area and cost of distribution

Cost and availability of transport facilities

Location of opponents warehouses

Availability of basic infrastructure such as ability, water, etc.

Labor supply situation and income structure

Government rules, fees, levies, etc.

Potential for further expansion of warehouse

Re-sale value in future

Possibility of change in the use of service at later stage

Geographical risks like flood, earthquakes, etc.

Factors determining Region of Warehouse:

Desired customer service level

Size of market to be served

Number of products marketed

Types, size and condition of the products to be stored as well as for what period

Material controlling system to be used

Product throughput (sales quantity) present and future

Production business lead time

Economies of scale

Stock structure arrangements

Aisle and gangways required for motion of goods

Office area requirement

Fluctuations popular (high inventory necessary to meet erratic demand)

Activities to be performed in warehouse

Factors deciding warehouse structure (design):

Types of products to be stored

Company's financial resources

Competitive environment

Warehousing storage ideas:

Grouping by product compatibility

Grouping by complimentarily (functionally scored items)

Grouping by in physical form similar items

Grouping by popularity (fast paced items to closer exit points and slow-moving moving items at distant put in place warehouse)

Working securities and buffer stocks are to be kept separately

To minimize workload (time) for order picking and transport aisles are redesigned to assist in more efficient movement of products to and from dock areas

Advantages of design:

Increase in output

Improved product flow

Reduced cost of operations

Improvement in customer support level

Provide better worker working conditions

Basic warehousing decisions

Warehousing management entails a number of important decisions, including possession, amount, size stocking and location that is which type organization, just how many, what size, what products and where.

The decisions related to warehouse are involved at Strategic Level, Tactical Level and Operational Level.

Strategic Level Decisions : These decisions are taken by the business top management, have long lasting impact on the procedure of the warehouse and involve major investment. For example decisions like

Warehouse Possession Decision (Role of Private, Open public or Contract functions)

How many warehouses and where you can be located ?

Material Handling Equipment selection

Tactical Level Decisions : Tactical Planning is the procedure of taking the strategic plan and breaking it down into specific, medium term activities and plans that involves significant investment.

Facility Layout (Sizing of the warehouse areas and storage Layout) and its equipment

Stacking Norms, Replenishment plans and batch sizing

Operational Level Decisions : Decision and insurance policies related to the real-time operation of the warehouse.

Warehousing strategy

The figure reveals a technique continuum ranging from private to deal to general population. Qualitative considerations, shown on the vertical dimensions, are (1) presence synergies, (2) industry synergies, (3) operating flexibility (4) location flexibility and, (5) Level economies. Each account and its own rationale are mentioned.

(1) Presence synergies: Existence synergies refer to the marketing advantages of having inventory located nearby in a building that is obviously associated with the venture (e. g. , the building gets the firm's name on the entranceway). It is broadly thought that customers are more comfortable when suppliers maintain inventory in local locations. Products and customers that benefit form local occurrence should be served from private or deal facilities.

(2) Industry synergies: Industry synergies make reference to the operating benefits of collocating with another organization serving the same industry. For example, organizations in the food business often receive substantive benefits when they discuss open public warehouse facilities with other suppliers providing the same industry. Reduced transport cost is the major benefit since joint use of same people warehouse allows consistent delivery of consolidated lots from multiple suppliers. Open public and agreement warehousing escalates the prospect of industry synergy.

(3) Operating overall flexibility: Operating versatility refers to the ability to adjust internal policies and procedure to meet product and customer needs. Since private warehouses operate under the complete control of the organization, they are usually perceived to show more operating flexibility. Alternatively, a open public warehouse often uses policy and types of procedures that are regular across its customer to minimize working confusion. While standard wisdom would suggest that private warehouses may offer more operating versatility, there are extensive public and deal warehouse operations that contain demonstrated substantial flexibility and responsiveness.

(4)Location flexibly: Location flexibly refers to the capability to quick modify warehouse location and quantity in accordance with seasonal or permanent demand changes. For example, in-season demand for agricultural chemicals requires that warehouses to be located near marketplaces that allow customer pickup. Outside the growing season, however, these local warehouses are unneeded. Thus, the suitable strategy is to be able to open up and close local facilities seasonally. Open public and contract warehouses offer the location flexibility to perform such requirements.

(5)Level economies: Scale economies make reference to the capability to reduce material handling and safe-keeping cost through request of advanced technology. High level warehouse generally have a larger chance to achieve these benefits because they can distributed technology's fixed cost over bigger volumes. In addition, capital investment in mechanized or robotic equipment and it can reduce direct variable cost. People and deal warehouses are usually perceived to offer better scale economies being that they are able to design procedures and facilities to meet higher amounts of multiple clients.

Warehouse Design Strategies

One key to effective design is the comparative dominance of picking or storage space activity. Both of these warehouse functions have opposing requirements.

Techniques that maximize space usage tend to complicate picking and render it inefficient while large safe-keeping areas increase distance and also reduce picking efficiency. Ideal picking requires small stocks in dedicated, close locations. This works against storage space efficiency.

Automation of picking, storage space, managing and information can make up for these opposing requirements to a diploma. However, automation is expensive to set up and operate.

The shape below shows how different transfer volumes, storage space requirements and technologies lead to different design principles.

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