Material Handling And Packaging

Published Date: 02 Nov 2017

1 – Introduction

2.1 – Material Handling And Packaging

By definition, material handling refers to the movement, control, storage and protection of goods, products or material throughout the entire process of product manufacturing, product distribution, product consumption and product disposal (MHI, 2013).

Material handling mechanical equipments is the ones that relate to the process of material handling involved in the entire system and are mainly divided into four categories. These categories include handling and storage equipment, engineered systems, bulk material handling and industrial trucks.

These activities of material handling when performed to transport goods internationally is termed as global material handling ad when performed within regions of a country is known as regional material handling. Material handling is considered to be a beneficial source in increasing the output, decreasing the control costs and maximizing productivity (MHI, 2013). When it comes to inventory management systems. Material handling is all about using the right equipments through which peak efficiency can be reached. Materials hold significant importance in the overall cost of construction.

2.2 – Warehousing

Warehouses simply explained are the planned spaces used for the storage and handling of materials and goods (logistic cluster, 2013). Global warehouses are constructed for the purpose of repositioning of stock so that a timely response to any kind of emergency can be countered. Global warehouses are built to be operated by skilled, permanent staff and normally sophisticated information system software is present to aid in the managing and planning of the activities of the warehouse.

Regional warehouses also known as field warehouses are mostly temporary in nature. Since this type of setup is small relative to global warehousing, the inventory system is mostly on paper and casual and unskilled labour force is applied to be used in these warehouses when needed.

Accessing the advantages and disadvantages of global warehousing, let us first consider the types of warehousing available for storage. Based on the cost a business can bear, entrepreneurs decide whether to opt for a private or public warehouse (Voortman, 2004).

Private warehouses are owned by the organization itself and thus offer a higher degree of control. Besides control compared to public warehouses, a private warehouse also costs much less even though the initial setup cost is relatively higher. In the long run private warehouses benefit the entire logistic system and enable an equilibrium between supply and demand (Voortman, 2004). Besides providing its share of benefits, private warehouses also have its share of disadvantages. The biggest disadvantage is the lack of flexibility to the changing environment a business faces. Since a private warehouse is constructed keeping a certain material or a mix often having a storage limit in mind, if the market demand changes immediately the company is unable to adjust to it instantly. Also in case the market of a certain product moves it is impossible for a warehouse building to move with it (Voortman, 2004).

Public warehouses though may cost higher than private warehouses, they are however equipped with the latest modern logistics systems and also offer extensive flexibility to the ever dynamic market conditions. Another advantage of a public warehouse is that a lot of cost is saved which is otherwise spent on the building, the land and the handling equipment (Voortman, 2004). Also the storage space can be altered according to the need of the organization and there is no provision of the building getting obsolete in case the market shifts (Voortman, 2004). The disadvantages include firstly compatibility of the computer system of the warehouse with the lease owner. Also effective communication is a big barrier in public warehouses and such types of warehouses seldom ever integrate properly with the entire logistic system of an organization. Another factor to consider relating to public warehouses is that they can be full at peak times and an issue of lesser space may arise (Voortman, 2004).

There are numerous benefits of a warehouse and without it in fact the proper functioning of an organization is impossible however it has its own challenges that are to be looked up before taking a final decision regarding any warehouse (Voortman, 2004). Among common warehousing problems are proper utilization of space, equipment problem, product handling problem, information gaps and budgeting & costing problems. Space utilization in warehouses is among the most important tasks and it should be, not to mention, efficient. Not only is this a hard to achieve that, it is also one of the most difficult tasks faced by warehouse managers (Voortman, 2004).

To overcome the utilization of space problem proper equipments are also very necessary that allow proper utilisation from top to bottom, horizontally and vertically. Handling of the product is another problem in warehouses, as certain products require a lot of handling and change many hands before finally moving out, thus resulting in an increase of manual labour cost. Warehouses usually uses highly sophisticated equipment and due to technological advancements an equipment that may be in use today will turn obsolete in no time, making way for the need of a more advanced equipment. Besides advancement, regular updates & maintenance of these equipment are another issue. Also warehouses result in an extended labour cost as it is a labour intensive activity. Warehousing budgeting and costing is a hard to pursue job as warehousing is a function of the logistics supply chain and its cost too will have to be seen within the total cost of logistics (Voortman, 2004).

2.3 – Inventory Management

Global inventory management refers to the approach where the production capabilities and inventory needs are aligned with the enterprise at a global level and not only at a regional level (Gelinas, Dull & Wheeler, 2011).

Regional inventory management refers to the functioning of an organization within a particular region whereas in global inventory management, examination of inventory and capacity of production is measured for the company’s entire global organization (Gelinas, Dull & Wheeler, 2011).

Global inventory management has its pros and cons with the major disadvantages being high carrying cost and high acquisition cost. Inventory carrying cost refers to the expenses incurred in keeping a good or material in the warehouse. It should be remembered that storing goods in warehouse actually spells out as reserving money on the shelf. His means the organization is left with little to spend on the daily requirements. This is also called the opportunity cost of inventory. Also many companies insure their inventory and so the more inventory and organization has, the more insurance cost it will have to pay. Inventory is treated as an asset of the company and so taxes are also levied on them which is an additional expense besides extra storage costs and not to forget the obsolescence cost (Narayan & Subramanian 2009). Obsolescence cost is the cost referred to the natural damage incurred to goods as it is understood that when goods are stored they will perish, deteriorate, break, expire, or get damaged in some way. Since global inventory management includes the inventory managing at a larger scale more cost is incurred acting as more fund loss to the organization resulting in a form of lesser spendable amount on hand.

The challenges faced by inventory management are somewhat the same as associated with regional or global inventory management as increased cost, obsolescence cost, taxes, warehouse cost, etc are all challenges that are though hard to face however through applying the perfect strategy and a balanced approach efficient and effective inventory management can be made possible.

3 – Conclusions

After a detailed study on the handling of material, warehousing and inventory management it can be said that these are costly procedures that involve monitoring of several influencing factors however through striking a balance between these factors a very effective and efficient storage of goods can be made possible which will in return increase the profitability and long term goals of an organization.

Whether an organization should apply a regional or a global approach towards material handling, warehousing and inventory management depends completely on the scale of business activities and the market situation at present however proper and learned decisions are required to be made in order to prove these decisions worthwhile as any wrong move will only add to the cost of the overall logistic management procedure thus harming the reputation and stance of an organization.

Through applying the right types of warehousing, material handling equipments and systems of inventory management not only can an organization stay in compliance with the changing situations of the market it will also be empowered to excel in its operations further in meeting every challenge that comes in its way.