The Different Types Of Warehouses

Published Date: 02 Nov 2017

1.1 Introduction

The ever increasing trend towards more product variety and short response times has placed a tremendous emphasis on the ability to establish smooth and efficient logistic operations. These operations even play a vital role in determining a company's competitiveness, since logistic costs constitute an important part of the overall production costs. The efficiency and effectiveness in any distribution network in turn is largely determined by the operation of the nodes in such a network, i.e. the warehouses. Indeed, the innovations in warehouse technology are numerous during the last decade. With respect to warehouse management, topics like planning and control have deserved wide attention in both the popular and scientific literature see e.g. Van den Berg and the references therein. In contrast, a sound theoretical basis for a warehouse design methodology still seems to be lacking. The logistic costs that are made inside a warehouse are to a large extent already determined during the design phase. Typically, a design runs from a functional description, through a technical specification, to equipment selection and determination of a layout. In each stage, target performance criteria (costs, throughput, storage capacity, and response times) have to be met. As such, warehouse design is a highly complex task, where in each stage trade-offs have to be made between often conflicting objectives. Another difficulty is the large number of feasible designs. Up to now, no overall accepted systematic procedure exists to design warehouses. Therefore, there is a clear need for research that can support such a systematic design approach. This paper is meant to provide a framework C:\Users\Karthik\Desktop\wh.jpg

Figure 1 Image of warehouse (Source: Google images.)

For Warehouse design and to review the literature while using this framework as a reference model. Within this paper, we restrict ourselves to topics concerning the internal warehouse structure and operations. Topics like economic justification of warehouses, the warehouse location problem and external logistics are not addressed. Also, human resource management and quality control are excluded. In this paper we analyze problems that are encountered during the (re)design of a warehouse or a warehouse system. Based on this analysis, we review the existing literature on warehouse design and control. We determine clusters of publications concerning specific problems as well as open areas for future research. An important drawback concerns the fact that the overwhelming majority of scientific papers address well-defined isolated problems and are typically of an analytical nature (performance analysis, evaluation of control policies, etc). A design oriented approach on the other hand primarily aims at a synthesis of a large number of both technical systems and planning and control procedures. Since most problems encountered during warehouse design are unfortunately not well-defined and often cannot be reduced to multiple isolated sub-problems, design often requires a mixture of analytical skills and creativity. Anyhow, research aiming at an integration of various models and methods is badly needed in order to develop a methodology for systematic warehouse model.

what is warehousing

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 parts of towns. The respective companies come equipped with loading docks to load and unload truck or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks. Some warehouses are fully automated where products are moved from one place to other with a system of automated conveyors and automated storage and

retrieval machines which run by programmable logic controllers and also with logistics automation software. In an automated warehouse the tracking of materials is coordinated by warehouse management system (WMS), a database driven computer program. Logistics personnel make use of WMS to improve the efficiency of the warehouse by maintaining accurate inventory levels taking into consideration warehouse transactions and directing put ways.

Traditional warehousing continuously is declining since the last decade of the 20th century with the introduction of Just in Time (JIT) techniques Figure 2 Structure of a Warehouse (Source: armitage.com)

Which are specially designed to enhance the return on investment (ROI) of a business by mitigating in-process inventory. JIT concept is based on delivering product directly from factory to the retail outlet without the use of warehouse, but in some cases like offshore outsourcing and off shoring in about the same time period, the distance between manufacturer and the retailer increases considerably in many regions which builds the need of at least one warehouse per region or per country for a given range of products in any typical supply chain. (Tompkins, Smith, 1998).

Recent developments in marketing field have led to the development of warehouse designing style, where the same warehouse is used for warehousing and also as a retail store. These types of warehouses are equipped with tall heavy duty industrial racks, with the items which are ready for sale are placed in the bottom parts of the racks and the palletized and wrapped inventory items being usually placed in the top parts.

Exporters/manufacturers are using warehouses as a point of developing retail outlets in a particular region or country. The above concept cuts down the end cost of the product to the consumer which in turn enhances the production sale ratio. Warehousing concept is used as a sharp tool by manufacturers to reach directly to consumers by avoiding or bypassing importers or other middle agencies. (Tompkins, Smith, 1998)

Types of warehouses

1. Private Warehousing

2. Public Warehousing

3. Contract Warehousing

4. Raw material and component Warehousing

5. Work in-process warehouses

6. Finished goods warehouses

7. Distribution warehouses

8. Fulfillment warehouses

9. Local warehouses

10. Value-added services warehouses

11. Centralized warehouse

12. Decentralized warehouse

1. Private Warehousing

A firm producing or owning the goods owns private warehouses. The goods are stored until they are delivered to a retail outlet or sold. Potential advantage of using a private warehouse is the ability to maintain physical control over the facility, which allows mangers to address loss, damage, and theft. When not in use they can rent it out. The construction and maintenance of private warehousing can be extremely costly. All the expenses have to be carefully analyzed and evaluated. These are:

i. Fixed expenses and building and land costs which are high;

ii. Expenses incurred on ensuring that warehouses are properly equipped with material-handling equipment like conveyors, forklifts, hand trucks, racks and dock levelers;

iii. The costs of salaries of staff required for peak activity periods which can be very high since retrenchment during slack periods may not be possible;

iv. Extra payment to be made for work on weekends and holidays;

v. Generator and other service charges are required to be taken into account.

vi. The cost of maintaining insurance records and of the premiums paid for fire, theft, and also for workmen’s compensation.

vii. The office and record-keeping equipment necessary for successful warehousing operations has to be budgeted, such item as fuel, air-conditioning, power and light.

Advantages

The advantages and disadvantages of private warehousing as against those of public warehousing are:

a. Private warehousing offers better control over the movement and storage of products as required by the management from time to time.

b. There is less likelihood of error in the case of private warehousing since the company’s products are handled by its own employees who are able to identify the products of their own company better.

c. If there is sufficient volume of goods to be warehoused, the costs of private warehousing compares favorably with that of public warehousing. But private warehouse may not be expected to be packed up to the brim all the while. Therefore the costs of private warehousing per unit may actually be higher.

2. Public Warehousing

A public warehouse rents space to individuals or firm needing storage, some provide wide array of services including packaging, labeling, testing, inventory, maintenance, local delivery, data processing and pricing.

All the foregoing cost factors operate in public warehousing as well. But in public warehousing, the expenses are distributed over several other consignments of other clients. In most instances therefore can render better service with greater flexibility for the user. A company running a private warehouse will have to compare costs incurred with the total figure for the complete service through public warehousing.

Advantages

a. It is generally less expensive and more efficient.

b. Public warehousing is sufficiently flexible to meet most space requirements, for several plans are available for the requirement of different users.

c. Public warehouses are usually strategically located and immediately available.

d. Fixed costs of a warehouse are distributed among many users. Therefore the overall cost of warehousing per unit works out to a lower figure.

e. The costs of public warehousing can be easily and exactly ascertained, and the user pays only for the space and services he use.

f. Public warehousing facilities can be given up as soon as necessary without any additional liability on the part of the user.

3. Contract Warehousing

Contract warehousing is a specialized form of public warehousing. In addition to warehousing activities such warehousing provides a combination of integrated logistics services. Thereby allowing the leasing firm to concentrate on its specialty. They provide customized services, e.g. Value Added Services. 

4. Raw material and component warehouses: It holds raw materials and always in a position to induct raw materials onto a manufacturing or assembly process.

5. Work-in-process warehouses: these warehouses hold partially completed products and assemblies at various points along production line or an assembly line.

6. Finished goods warehouses

It holds inventory usually to balance the variation between production schedules and demand. Normally these warehouses are situated near manufacturing plant, and it is characterized by the flow of full pallets in and full pallets out, assuming the product size and volume authorizes pallet-sized loads.

7. Distribution warehouse and distribution centers

Distribution warehouses accumulate products from various manufacturing points for combined shipment to the common customer. Normally, the warehouses are located central to either the production locations or the customer base. Product movement represented by full pallets or cases in and full case or broken case quantities out.

8. Fulfillment warehouses and fulfillment centers

It receives, pick, and ship small orders for individual consumers

9. Local Warehouses: These warehouses mainly for the purpose of responding to the customer demand. Frequently, single items are picked, and the same item is shipped to the customer every day.

10. Value-added service warehouses: Key product customization activities takes place like packaging, labeling, marking, pricing, and returns processing.

11. Centralized warehouse: Centralization generally refers to the allocation of the warehousing services to one particular business unit which provides services to the whole firm. The decisions are made at the central location for the entire network. The main characteristics of a centralized approach are control, efficiency and good economy.

Benefits:

Improvement in productivity through balancing

Increase in available knowledge

Bundling of product flows

Combined use of production flows

Control on the system

Uniformity in the processes and Improved efficiency

Limitations:

Customer desire of self pickup cannot be provided

Problem of concentration of customers in only certain markets and inhomogeneous

Customer structure.

Long internal transport paths in large central warehouses and higher costs for the infrastructure

Slow process of decision making, less flexibility

High initial costs

Bureaucracy in the system

Inflexibility

Dependent systems

12. Decentralized warehouse: Decentralization approach gives the individual business units autonomy and independency over their own resources without any major considerations over the remaining units unless there is a necessity for the overall organization policy. In this approach each facility identifies its most effective strategy without considering the impact on the remaining facilities in the network and this leads to the local optimization. The main characteristics of the decentralized approach are empowerment of individual business units, flexibility, and service orientation. They provide as good service as the centralized warehouses in terms of customer service level.

Benefits:

Rapid adjustment to the changes

Flexibility

Quality

Innovation

Low startup costs

Customization and catering to individual needs is possible

Increase in responsiveness

Improvement in reliability

Limitations:

Lack of centralized control

Duplication of resources

Extensive use of effort and expertise

Increase in costs (Tompkins, Smith, 1998), (Mulcahy, 1994)

1.3 Importance of warehousing

Warehouses are basically intermediate storage points in the logistics system where raw material, work in process, finished goods and goods an transit are held for varying duration of times for a variety of purposes. The warehousing functionality today is much more than the traditional function of storage. The following are main function that warehousing serves today:

1. Consolidation

This helps in providing the customer requirement of a combination of products from different supply or manufacturing sources. Instead of transporting the products as small shipments from different sources, it would be more economical to have a consolidation warehouse. This type of warehouse will receive the products from various sources and consolidate these into shipments, which are economical for transportation or as required by the customer.

2. Break Bulk

As the name suggests, the warehouse in this case serves the purpose of receiving bulk shipments through economical long distance transportation and breaking of these into small shipments for local delivery. This enables small shipments in place of long distance small shipments.

3. Cross Docking

This type of facility enables receipt of full shipments from a number of suppliers, generally manufacturers, and direct distribution to different customers without storage. As soon as the shipments are received, these are allocated to the respective customers and are moved across to the vehicle for the onwards shipments to the respective customers at these facilities. Smaller shipments accompanying these full shipments are moved to the temporary storage in these facilities awaiting shipments to the respective customers along with other full shipments.

4. Product Mixing

Products which are classified into different types are received from different manufacturers or sources in full shipment sizes. These products are mixed at these warehouses into right combination for the relevant customers as per their warehouses and continuously provided for the product mixture shipments requiring these.

5. Stock Pilling

This function of warehousing is related to seasonal manufacturing or demand. In the case of seasonal manufacturing, certain raw materials are available during short periods of the year. Hence, manufacturing is possible only during these periods of availability, while the demand is full year around. This requires stockpiling of the products manufactured from these raw materials. An example is mango pulp processing. On the other hand, certain products like woolens are required seasonally, but are produced throughout the year, and thus need to be stockpiled as such.

6. Postponement

This Functionality of warehousing enables postponement of delivering of products to customer until orders are received from them. It is utilized by manufacturers or distributors for storing products ready up to packaging stage. These products are packaged and labeled for the particular receipt of the order.

7. Positioning

This permits positioning of products or materials at strategic warehouses near to the customers. These items are stored at the warehouse until ordered by the customers when these can be provided to the customers in the shortest lead-time. This function of warehousing is utilized for higher service levels to customers for critical items and during increased marketing activists and promotions.

8. Decoupling

During manufacturing, operation lead-times may differ in order to enable production economies. Thus, the batch size and the lead-time of production may differ in consecutive operations. This decoupling of operations requires intermediate storage of materials required for the subsequent operation.

9. Assortment

Assortment warehouse store a variety of products for satisfying the variety requirements of customers. For example, retailers may demand different brands of the same product in small quantities rather than larger quantity of single brand.

10. Safety Stocking

In order to cater to uncertainties like stock outs, transportation delays, receipt of defective or damaged goods, and strikes, safety stocks have to be maintained. This ensures that, on the inbound site production stoppages do not occur, and, on the outbound side customer are fulfilled on time.

Figure 3 Warehouse functions (Source: erp.net.au)

1.4 Industry background

The practice of storage and warehousing is as old as civilization .Only the methods, quantity, and safety factors have improved in modern times. Undoubtedly it is one of the important marketing functions that involve holding and preserving goods from the point of time they are produced until they are needed for consumption. Storage is an exercise of human foresight by means of which commodities are protected from deterioration, and surplus supplies in times of plenty are carried over to the season of scarcity. The storage function, therefore, adds the time utility to products. Agriculture, particularly in India, is characterized by relatively large and irregular seasonal and year-to-year fluctuations in production. The consumption of most farm products, on the other hand, is relatively stable. These conflicting behaviors of demand and supply make it necessary that large quantities of farm produce need to be stored for a considerable period of time.

A warehouse is "a commercial building for buffering and storage of goods, or an intermediate area for storing of raw materials or products until they are needed for production or consumption" (Chua & Teo, 2008). Warehousing, being an essential component of logistics, is a key aspect of modern supply chains and plays a critical role in the success or failure of businesses today (Frazelle, 2002). If one takes a closer look at the detailed breakdown of the operating cost of a particular company, warehousing contributes to about 20% of logistics costs (Kearney, 2004). The substantial amount being tied up in warehousing resources prompted many companies to implement Just-In-Time (JIT) system which is "an inventory strategy that strives to improve a business’s return on investment by reducing in-process inventory and associated carrying costs" (Wikipedia, 2010). However, the lean manufacturing concept has been proved to be impossible to realize the total elimination of a warehouse, mainly due to short lead time tolerance by customers, needs for holding of safety stock, further consolidation process at destination, etc. Due to globalization, the increase in complexity of the supply chain has also increased the complexity of the roles played by a warehouse. Generally speaking, the traditional distribution warehouse which is mainly for storage and buffering of products has evolved to the production warehouse which can be seen as cross docking points i.e. where goods are moved directly from inward to outward vehicles without being put away into inventory, value-added service centers (e.g. pricing and labeling goods for customers), production postponement points (configuring or assembling goods specifically to customer demand so that a smaller range of generic products is held in inventory), return goods handling centers i.e. for reverse logistics of packaging, faulty goods or end-of-life goods and many other miscellaneous activities, such as service and repair centers (Maltz & DeHoratius, 2004).

1.41 Three axes to warehousing

This section discusses three different angles/axes from which a warehouse may be viewed: processes, resources, and organization. Products arriving at a warehouse subsequently are taken through a number of steps called processes. Resources refer to all means, equipment and personnel needed to operate a warehouse.

Finally, organization includes all planning and control procedures used to run the system. Some definitions are needed for clarity. A product is defined as a type of good, for example shampoo bottles of a specific brand. The individual bottles are called items (or Stock Keeping Units, SKU's) and the combination of several items of several products that are requested by a customer is called a customer order.

1.41.1 Warehouse processes:

The flow of items through the warehouse can be divided in several distinct phases, or processes. The receiving process is the first process encountered by an arriving item. Products arrive by truck or internal transport (in case of a production warehouse). At this step, the products may be checked or transformed (e.g., repacked into different storage modules) and wait for transportation to the next process. In the storage process items are placed in storage locations. The storage area may consist of two parts: the reserve area, where products are stored in the most economical way (bulk storage area) and the forward area where products are stored for easy retrieval by an order picker. Products in the forward area are often stored in smaller amounts in easily to access storage modules. For example, the reserve storage may consist of pallet racks while the forward storage may consist of shelves. The transfer of items from the reserve storage to the forward storage is called a replenishment Order picking refers to the retrieval of items from their storage locations and can be performed manually or (partly) automated. In succession, these items may be transported to the sorting and/ or consolidation process. Consolidation here

refers to the grouping of items destined for the same customer. At the shipping area, orders are checked, packed and eventually loaded in trucks, trains or any other carrier.

1.41.2 Warehouse resources:

A number of resources can be distinguished.

The storage unit, in (or on) which products may be stored. Examples of storage units are pallets, carton boxes and plastic boxes.

The storage system. This may consist of multiple subsystems that store different types of products. Storage systems are very diverse; they may range from simple shelves up to highly automated systems, containing automated cranes and conveyors.

The retrieval of items from the storage system can be performed manually or by means of pick equipment. An example of often used pick equipment is a reach truck.

Other equipment that supports the orderpicker is called orderpick auxiliaries, for example bar code scanners.

A computer system may be present to enable computer control of the processes by a warehouse management system.

The material handling equipment for preparation of the retrieved items for the expedition includes sorter systems, palletizers and truck loaders.

Finally, personnel constitute an important resource, since warehouse performance largely depends on their availability.

1.41.3 Warehouse organization:

In this subsection, we discuss organizational issues in a warehouse. The far most important decision concerns the definition of the process flow at the design stage. Examples include: the decision to use a separate reserve area since this implies that a replenishment process will be part of the warehouse operation, the retrieval of items in batches or the splitting of the pick area in zones which both require a sorting process and/or a consolidation process, or the use of separate storage and retrieval aisles.

Furthermore, some processes require specific organizational policies:

At the receiving process, an assignment policy determines the allocation of trucks to docks.

At the storage process, items are transported to the storage system and are allocated to storage locations. Several storage policies exist. A dedicated storage policy prescribes a particular location for each product to be stored, whereas a random storage policy leaves the decision to the operator. In between, a class based storage policy (ABC zoning) allocates zones to specific product groups, often based upon their turnover rate. Other storage policies include correlated storage or family grouping, aimed at storing products at nearby positions if they are often required simultaneously. If the storage system has a separate reserve area, a storage policy for the reserve area is also needed. Which articles in what quantity are stored in the forward area and how replenishments are timed, is decided by forward/reserve and replenishment policies, respectively. Note that the latter control problems highly depend on decisions made already at the design stage.

At the orderpicking process, (parts of) orders are assigned to one or more orderpickers. Various control problems deserve attention here. First, the total pick area may be divided into picking zones, to be served by different orderpickers, through a zoning policy. Two alternative policies exist: parallel or sequential zoning. Second, orders are picked one by one (single order picking) or in batches (batch picking). Picking policy is selected; this directly implies that the picked orders must be sorted. Again, two sorting policies exist: pick and sort (sequentially) and sort while pick (simultaneously).

Third, a routing policy may define the sequence of retrievals and the route to visit the retrieval locations. Finally, a dwell point policy may prescribe the position of idle orderpick equipment.

If a consolidation and sorting process is present, orders are allocated to output lanes by a sorter lane assignment policy.

At the shipping process, orders and trucks are allocated to docks by a dock assignment policy.

Finally, allocation of tasks to personnel and equipment are addressed by operator and equipment assignment policies

1.42 warehousing in India

In pre-independence era, the warehousing concept was in the form of large storages controlled by the rich farmers or 'Zamindars'. They were having facilities and resources to take care of large scale storage, hoarding and then selling at their convenience.

The British rulers did not contribute in such development activities as they were mainly spending time in governance and curbing of the independence movement. It is only after independence that this sector started gaining some attention.

Among the key sectors, since then the highest growth is been in Engineering Goods and IT, Electronics & Telecom domains since their warehousing demand has been respectively growing at 8.2 and 8.6 percent from 2010-13. The other sectors have witness growth rates in the range of 5.7 to 7.1 percent.

According to the latest findings from CBRE Group (a large commercial real estate services firm), the country witnessed an increased market activity for warehouses and logistic spaces during the first half of FY 12. Demand for logistics and warehousing spaces was not limited to big cities such as Delhi NCR (national capital region), Mumbai and Bangalore, but was also spread across other tier II cities.

"E-tailers invested heavily into strategically located assets and have been taking up quality warehousing space across India, primarily in NCR, Mumbai and Bangalore. Availability of large land parcels at relatively low cost, connectivity to multiple markets across states and industrial clusters, has led to the emergence of some tier-II and tier-III cities as favored destinations for the development of logistics parks and warehouses," CBRE noted.

Not only that. Rental values witnessed growth across most micro-markets due to higher demand for warehousing and logistics facilities. "The rising level of activity in logistics and warehousing space is testimony to the growing confidence of domestic and international retailers in India. Factors such as enhanced connectivity, implementation of various reforms and completion of major infrastructure projects are expected to further augment the logistics sector across India," (Anshuman Magazine, chairman and managing director, CBRE, South Asia).

FMCG majors, white good manufacturers and consumer electronics firms are also on an expansion spree and are steadily increasing their footprint across the country. While built-to-suit options have been the preferred mode of expansion for most occupiers, large size transactions of around 10,000 to 15,000 square feet of warehousing space have been reported in the first half of 2012. Developers have joined in the fray by taking initiatives to provide modern logistics park with quality warehouse facilities. (Source TOI)

"India’s new warehouses"

One issue, other than corruption, that has troubled the UPA government since its first term, is inflation, especially food price inflation. But most analysts believe that though India needs to improve its productivity, there are enough food grains in the country to feed the teeming millions. The real worry is about the supply chain or the lack of it, to be precise.

Estimates suggest that India wastes almost 20 percent to 25 percent of its food grains due to improper or inadequate storage. That is roughly 60 million tonnes of food grains each year, almost as much as what India actually stores in its official go downs. The degree of wastage is nearly double in the case of easily perishable commodities like fruits and vegetables.

It was in this context that the government instituted the Warehousing Development and Regulatory Authority (WDRA) in October last year. The idea was to improve the storage capacity in the country and also help producers and consumers get a better deal by cutting out the intermediaries and wastages. The 2011-12 Budget also recognized cold chains and post-harvest storage as an infrastructure sub sector eligible for income tax relief. The initial focus for the WDRA has been the agricultural sector. Thus, starting April 2011, the central government announced the Rural Go down Scheme to promote the construction of warehouses in the rural areas.

The WDRA, on its part, has devised the system of Negotiable Warehouse Receipts, which will, in time, allow farmers to get the best price for their produce and help bring down prices of commodities by cutting out the arbitrage earned by middlemen (see graphic). At present, the scheme covers 40 agricultural commodities like cereals, pulses and spices.

"Earlier, farmers used to engage in panic sales since they were in dire need of money immediately after the harvest, primarily to pay off many of the loans they had taken for agriculture.

They had little bargaining power against the local trader since farmers had no space to store the food grains safely," explains Dinesh Rai, chairman, WDRA.

As of now, most warehouses in rural India are for captive use, with very few actually surviving as standalone businesses and typically there are four to five middlemen between the producer and buyer. However, over the last few months, the WDRA has registered 50 warehouses across the country, which will now be able to issue such negotiable warehouse receipts. For getting such a registration, a warehouse has to be accredited by one of the eight accreditation agencies chosen by the WDRA. These agencies, four each in the public and private sector, ensure that the warehouse concerned has the wherewithal to not only safely store the commodities, but also have the ability to index them according to the quality and ‘best before’ dates. WDRA has tied up with the Indian Banks’ Association to ensure that banks also honour the receipts from registered warehousing.

Rai says that another 300 warehouses are in queue for accreditation. He expects this number to rise after three to four months, once the WDRA links the registered warehouses with spot exchanges through the introduction of electronic receipts, the DMAT account equivalent to Warehouse receipt.

The actual storage in the warehouses is yet to start as the WDRA is running an awareness campaign across the country to familiarize farmers with the process. In time, Rai expects to focus on developing industrial warehousing as well as promoting the cold chain to ensure that fruits and vegetables are also brought under the warehousing provisions.

 

The Downside

While the WDRA’s move is likely to benefit all concerned, not everyone is convinced that the one issue is the extent to which small and marginal farmers would benefit, since they often have very small quantities to store, which may not always be attractive for warehouses.

Madan Sabnavis, chief economist of CARE Ratings, says this issue will only get resolved over time. Initially, a warehouse may focus on acquiring the bigger accounts, but as the store gets filled up, it will focus on the smaller players.  Others suggest the formation of producer groups by farmers to ensure viability.

In future, industry watchers also apprehend some turf war between the WDRA and state governments. This is because spot exchanges for agricultural commodities are governed by the state legislations and as such the WDRA may find itself incapable of resolving problems if there are trade irregularities in a spot exchange. But Anjani Sinha, CEO of National Spot Exchange, assures that exchanges are required to comply with the WDRA norms too.

Another apprehension of the industry is that the government will need to bring in a separate legislation to make the warehouse receipts truly negotiable instead of a mere document that establishes ownership. However, Rai says that a separate legislation is not required.

In fact, the WDRA is currently drafting electronic warehouse receipts’ regulations within the Warehousing (Development & Regulation) Act 2007. These regulations are expected to come into effect in the next two months. Notwithstanding these procedural issues, the logistics and warehousing industry have welcomed the creation of the WDRA as "one of the best developments" in this field. (Forbes India)

1.5 Subject background

Human being has been in the business and commerce from several thousand years in one way or the other. It is only the last twenty five years that there has been a very drastic advance in the science of warehousing. In the present competitive world, the new warehousing ideas are becoming obsolete by the time the infrastructure is being arranged to implement the new ideas. This is the phase of the warehousing industry nowadays in which an organization should strive to be more efficient and effective than the other competitors. They must implement some sophisticated technologies very effectively in order to stay in the competition