CIPS Level 4 Diploma in Procurement and Supply

Module title: Whole Life Asset Management L4M7

Books for reference:

1. Procurement and supply chain management by Lysons
and Farrington
2. Warehouse Management by Richards G.
3. Warehousing magazine
4. Logistics Manager Magazine

Leading global excellence in procurement and

supply
 Whole Llife Asset Maanagement [L4M7]

Learners must be able to explain the

methods of inventory storage and
control and analyse the concept of
whole life cost through to disposal

All right reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional Slide 1
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright ©2018 CIPS
Learning Outcome 1: Understand the
methods for the storage and
movement of inventory
1.1 identify the principles, purpose and impact of
stores and warehouse design
1.2 Explain the use of product coding in inventory
operations
1.3 Contrast the impact of the use of different
warehousing equipment

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Important words to note
• Stores- small, local storage facilities of
immediate use items.
• Warehouse- large scale storage facilities.
May be stand alone or integrated.
• Distribution centres and distribution
hubs- warehouses that are intended to be a
focal point for specified activity for a
geographic area.
• Stockyard- an open area often used to
store bulk stock items, vehicles and
appropriate materials.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Principles of Stores and Warehouses
• May contain raw materials, components,
spare parts, items returned from
customers, equipment stored for hire.
• Warehouses differ; some may handle
large bulk volumes, may make them
smaller, non bulky items.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Purposes of stores and
warehouses
• Avail stock to internal/external customers
• Maintain a safe environment for workers
• Maintain a secure environment to avoid
stock losses
• Maintain suitable environment for stock
to minimise losses.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Volumes of stock and locations
• A decision to be made on the volumes of stock required for
immediate use.
• Organisations need to consider the supply chain involved.
• Lead time involved in obtaining stock.
• Higher levels of stock incur higher costs of storage.
• Centralised warehouse-single location used to supply a whole
country
• Regional warehouse- used to supply a part of the country.
• Local warehouse- location suited close to user/customer
• Warehousing in another country
• Outsourced warehousing- outsourced to specialist warehouse
• Partnering
• Case page 4.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Factors influencing locations of
storage
• Cost of location
• Availability and suitability of the building
• Availability and suitability of staff
• Nature of the goods to be stored
• Access to transport infrastrucure

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Decision on storage facilities and
storage
• Future needs based on projections and any
change/development of the organisation.
• Qualitative analysis- series of opinion based
statements. Non quantifiable. look at existing
strengths and weaknesses as well as future
requirements.
• Quantitative analysis- uses number based
factual statements. can use cost analysis for
routine operations, current inventory
performance measures etc.
• Most storage decisions based on both
quantitative and quantitative analysis.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
How many storage facilities an
organisation to have?
• The cost of warehouses
• The transport costs
• The total cost= cost of warehouses plus
cost of transport
• A systematic approach involving multiple
options are considered and evaluated.
• Case Page 9.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Stores and warehouse design
• Wide range of approaches to be used.
• Most organisations are limited by what
they already work with.
• 1. Structural features- multiple
floor/single floor
• Light, temperature, humidity and
ventilation
• Warehouse equipment requirements
• Getting goods in and out
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Structural features
• Single floor layout- no requirement for
higher-level access via lifts or stairs.
• Weight loading issues are far less
important
• May allow full use of the height of the
building.
• Max use of handling equipment and
reduces operating risks.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Multiple floors design
• Maximises the use of available land.
• Each floor can be allocated different
products- zoning.
• Consideration od full stock weight loading
• Use lifts, conveyors and hoists.
• May be need to duplicate access
equipment to avoid breakdowns which
causes operational delays.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Hoist

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Light, temperature, humidity and
ventilation
• Take advantage of natural lighting to
reduce heating costs.
• Some stock may require warmer
temperature.
• Some specific stock may require through-
flow ventilation to avoid deterioration.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Warehouse equipment requirements
• Heavy lift cranes may be required to
move weighty items.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Getting goods in and out
• Actual requirements vary from
organisation to organisation.
• Dependent on expected role and
movements for the facility.
• Sizing and positioning of both external
and internal doors.
• Access roads
• Efficient and effective loading /unloading
achieved by dock design.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Stockyard design
• There has to be enough space for stock
storage.
• The bulky items will require larger lifting
and moving equipment.
• Preferably a flat ground area
• Good drainage is essential to avoid
damage to the surface.
• Some covered areas may reduce climate
impact, protecting the stock.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Health and Safety
• Comply to health and safety
regulations.
• Contribute to smooth running of
the organisation.
• Zoning of warehouse

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Security
• Concern for both staff and assets.
• Restricted of the public on-site.
• Resist unauthorised entry.
• Isolate delivery and collecting vehicles.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Factors that influence stores and
warehouse layout
• Stores work on immediate use
requirements.
• Some warehouses may receive goods in
and hold them in an area for same day
collection.
• Others have outbound deliveries going to
customers or other warehouses-
crossing docking.
• Most often required items should be easy
to retrieve.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Characteristics and requirements of
stock items
• Size
• Weight
• Volume
• Stock might be on convenient pallets, card
board boxes or in tote boxes.
• Tote boxes- reusable storage box. Can be
open or have lids or flaps to close them.
• Pallets are structure that are designed to
support a load and can be lifted using the
fork.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Storage requirements for stock items
• Tote boxes look like household storage
boxes.
• Available in variety of sizes.
• Removable lidded, hinged, open front and
open topped.
• Space is also required for empty pallets,
packaging and tote boxes.
• These can be returned to the originator,
retained or recycled.
• In drums or loose.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Storage requirements for stock items
• Store similar type of items in the same area.
• Stock should not be stored directly on the
floor.
• It becomes difficult to lift and more
vulnerable to damage.
• Special racking is available to maximise the
space usage. Examples of pallet racking or
tote racking, cable spools, stock cages.
• High value items may benefit from isolation
and additional security measures.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Special products as stock items
• Bulk paper is vulnerable to damp.
• Temperature control to maintain product conditions.
• By zoning the area different temperature can be
maintained in an efficient way.
• Electronic components may need isolation from
magnetic/electronic interference.
• Chemicals have handling regulations to avoid
spilling or mixing.
• Bottled gas is flammable
• Liquid products may solidify in cold weather
• Fabric/garments need production from sunlight.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Type of equipment required for stock
handling
• The type of equipment dictates the
amount of space around the storage.
• Access route taken by the equipment.
• Maintain a safe working, efficient and
effective work environment.
• Palletised stock should allow pallet
handling equipment to be used.
• Accessing higher levels
• Need to access the aisles
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
How much space required for
storage?
• Some organisations have peaks in
demand causing peaks and low points in
storage requirements.
• There may be a balance of volumes for
storage- some items are high in stock
when others are in low stock.
• Irregular demand- eg toy manufacturer

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Solutions to high irregular or
seasonal demands
• Allow for seasonal additional storage by creating
flexibility in the design.
• Eliminate unused and unwanted stock
• Acquire temporary additional storage
• Get supplier to hold additional stock for short
notice deliveries
• Supplier deliver directly to customers
• Get a specialist logistics company to support
additional demand.
• Install a mezzanine floor- a floor inserted in a high
roofed building to create an elevated additional
working or storage space.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Space requirements for other
operations
• Inbound and outbound goods areas needed
within storage facility.
• Space may be needed for temporary storage
of items- checking or testing (awaiting
inspection)- quarantine area.
• Waste handling also need to be considered
• Kitting- preparing a range of items into a
single unit for a specific use- a kit of items
created for a specific task.
• Reverse logistics- movement of items in the
reverse direction from original supply.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Activity
• What structural factors have an influence on
warehouse design?
• How does the frequency of demand of an
item influence the layout of a store or
warehouse?
• Why might zoning of a warehouse be an
important requirement?
• Give three examples of the types of zoning
that may be required.
• How might future business plans affect
decisions relating to warehouse layout?
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Flow, space utilisation and flexibility
• Store facility will receive goods, store them, retrieve
them, make them available.
• Good flow will avoid delays and aide efficiency of
operations.
• Flow consideration is about identifying the potential
for delays caused by bottlenecks.
• Avoids congestion, one way system.
• Clarity in the direction of movement.
• Avoid crossing over.
• Rows may be labelled, location maps, signage.
• Inbound stock should not interfere with outbound
despatch.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Improving flow
• One way direction can be put in place.
• Picking orders has to be arranged to
provide efficiency.
• Process several orders at the same time
so that a single journey around the
system can pick several orders.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Other efficient flow layouts
• Through flow layout is designed to
work in straight lines.
• Separate goods-in and goods-out docks.
• Maximise the potential use of stock
handling equipment.
• Separate items requiring picking by hand
from those that can be lifted.
• U-shape layout- goods-in and goods out
are in the same end of the warehouse.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Space utilisation
• Organisations need to reduce the costs of
storage by using efficient and effective layout.
• Narrow aisle- to increase the area available for
storage.
• Aisle space depends on the type and size of
stock stored.
• One way flow has advantages.
• Typical warehouse has aisle width of 2.5- 4.5m
• Narrow aisle are 2m
• Very narrow are 1.4m
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Narrow Aisle
• The narrow aisles will restrict access and
require different stock handling
equipment.
• Where forklit access is required ,aisle
width will determine the equipment to
use- front facing or specialist side access.
• The narrower the aisle, the more
specialist equipment needed and less
flexible storage becomes.
• Safe access equipment needed to store
and retrieve stock.
All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS
Space flexibility
• Flexibility of layout and racking is beneficial if
stock requirement is variable through the year.
• Many organisations establish fixed positions for
stock items that are reviewed periodically.
• Specific stock can be relied on to be in the same
position time after time.
• Variances in stock volumes overtime may result
in some areas being overfilled and others with
space available.
• Flexible alternatives is to have random positions
with any available suitable used for stock.

All rights reserved. These slides are provided exclusively to CIPS Approved Study Centres for the sole purpose of teaching CIPS Professional
Qualifications, they are not to be used for any other purpose and may not be altered, copied, sold or lent to other parties. Copyright
©2018 CIPS