Aung Kyaw Moe / Task 2 Warehouse and Inventory

Memo
To: From: Date: RE:

Francois Damba Aung Kyaw Moe

28 May 2013

TASK 2 WAREHOUSE AND INVENTORY

I have learnt that we need to relocate the warehouse away from the Mugla on account of the forecasted hurricane. I this regard, I would like to present my report on how we are going to organize this relocation of Mugla warehouse in the following Sections: (1) (2) (3) (4) Analysis of Current throughput of the Warehouse Characteristics of the Products Stored in the Warehouse Calculation of the Size and Space Requirement Criteria for Identification of New Warehouse

Analysis of Current throughput of the Warehouse

Most of the supplies stored in Mugla Warehouse are Foodstuff and Household items. Rice 5% Broken is about 639900 Kg in total and packed in 50 Kg Bags. Beans red Kidney is also packed in same size and it is 262312 Kg as opening balance. These above-mentioned two items are the most bulky part of all supplies. Vegetable oil is of 20 liter Tin can and 82214 Liters in total. This is fragile items to store and to move from one place to another. 83042 Kg of Wheat Soya Blend comes under the package of 25 Kg bags whereas Sugar and Iodized Salt are packed in 1 Kg sachets. All of them are powder type and very sensitive to the moisture and temperature. The rest of supplies are those of family kit and household utensils such as Family Tents, Plastic Sheeting, Kitchen Set, Blanket and Jerry Can. The first three of them come as individual unit but 1230 Blankets are baled as bundle of 30 pieces and 40 Jerry Can contained in a box for 520 boxes in total number.

Characteristics of the Products Stored in the Warehouse

We need to check the characteristics of the products to be stored because this will have an impact on the selection of a new warehouse facility and the design of the layout, the selection of any equipment and the working methods.

The main characteristics which should be taken into account for our new warehouse are as follows: (1) VOLUMES The volume of goods to be handled is the major aspect to consider to building a new warehouse. Especially, SCILaid supplies are foodstuff which is quite bulky and take much space. In this regard, we must consider the frequency and size of deliveries to be received at the warehouse at certain time interval and the quantity to be stored. Based on our distribution plan, we should also think about the frequency and size of dispatches to be made from the warehouse. These factors will surely determine the requirement of storage space for goods receipt, bulk storage and goods dispatch activities and also the manpower requirements to operate the warehouse. (2) SIZE AND WEIGHT Basically 80% of the space used in a warehouse is dominated by the bulk storage area and this is mainly determined by the size, weight and quantities of the goods to be stored. In the case of Mugla warehouse, food items like rice, bean, sugar and salt are very heavy as well as bulky items even they can be piled up. Other household items are not very heavy but take much of space and voluminous. Another thing is that in a warehouse, we must add the extra space for access to the goods for storage and retrieval of goods and supplies. So in calculating the volume of bulk storage area that will be required, we have to take into account the fact that we will require more space than the actual volume of supplies and that the storage equipment (if used) will also take up space. At its highest inventory level, we find that according to the recent stock report, Mugla warehouse has 1856.13 Cub. Meter of total volume and 1,101,755 Kg of total weight. (3) GENERAL ENVIRONMENT AND TEMPERATURE SENSITIVITY To avoid deterioration in the quality of goods during their stay in the warehouse, we must carefully consider about the physical environment that provides conditions that ensure the goods to be stored safely. Not only temperature (heat and coldness) but moisture and humidity in the air are the main causes that can damage the supplies when they are transported and unloaded outside of the warehouse building. In our case of Mugla warehouse moving, most of the items are foodstuff and they can be contaminated and destroyed easily if they were put in improper environments. When product like rice, sugar and wheat Soya blend are received in bags, and the temperature is high outside, the product can increase in temperature. If we left the bags under the direct heat of sun for a long time, they can absorb much heat and the supplies can be damaged. In a confined and narrow space, if these bags are stacked in the warehouse for a certain extent of time, they will generate heat and lead to spontaneous combustion. Grains like rice and bean stored in Mugla warehouse need to be stored in dry and cool place and we need pallets on which to stack these bags to get good ventilation. They are quite sensitive to the maximum 70% of air humidity and 13.5 % of moisture in the storage environment. We need to thoroughly monitor the moisture level, odour and parasites to protect them from any damage. Cereal and powders like WSB powder, sugar and salt need the similar care and condition of storage like grains. Canned products like Vegetable oil stored in Mugla warehouse are also sensitive to the moister because containers can be rusted and bulging. These supplies can be stacked on the pallets, avoiding direct contact with the cement floor, but not very high stacking because of

their weight. We have to investigate them if we find distorted cans (bulging lids) or gas whistling out or there are some signs of oil leakages, whether they are still edible or not. Other non-food items like tent, family kitchen set, plastic sheeting and jerry can need to be stored in a dry and clean environment. Blankets and clothing are very sensitive to the moisture and level of humidity because they can fully absorb the moisture and generate fungus and moths. If we are using battery operated handling equipments, we need good ventilation for recharging these batteries because during the recharging process hydrogen gas is produced which in a confined space is highly flammable with frightening consequences. This also suggests that there needs to be strict control over smoking policy in a warehouse and no hand phone usage near the flammable fuel stock.

(4) TYPE OF PACKAGING There are various ways of Packaging types including box, bag, bulk and loose. The way to handle these supplies depends on the type of packaging. In the same way, the handling method, equipment needed to use and how to stack (block stacked, binned, racking, etc.) and stock will depend on the variety of packaging types. If possible, the warehouse manager should liaise with procurement on the specification of packaging types used in order to minimize the impact on the warehouse operations. In our Mugla warehouse, most of food items are packed in bags (50 Kg/ 25 Kg/ 1 Kg) and all of them need pallets to put on. Blankets, Kitchen set and Jerry Can are coming by bundles and boxes and we can consider having stretch and shrinking wrappings to protect from moisture and humidity According to our warehouse and inventory manual, Shrink wrapping uses either heat or vacuum technology to shrink a giant plastic bag to the shape of the product whereas Stretch wrapping is like the cling film that we use at home. If a pallet is wrapped around the top layers with this it prevents movement in transit. (6) HAZARDOUS MATERIALS We need to keep Hazardous materials such as pesticides; compressed gases and fuels away from food stuff and these items require special handling and storage. They will normally be stored in an area separate from other materials and extra space will often be required. Ideally they should be stored in a separate building. Calculation of the Size and Space Requirement Before moving to any new warehouse, we need to calculate about the total size and weight of the current throughput of supplies stocked in Mugla warehouse, based on peak inventory level in the year, as per following table:

STOCK REPORT/ MUGLA WAREHOUSE

Item Code FCRRICEBR5 FPULBEANRK01 FOILRAPERE01 FNUTWSBX6722 FBAFSUGAWH04 FBAFSALTIODE HSHETENTF16C HSHETARPW460 KRELCOOSETA HSHEBLANWMT1 HCONJCANP20

Item Description Rice 5% broken (50 kg bag) Beans red kidney (50 Kg bag) Vegetable oil (20Lit Tin) Wheat soya blend (25 Kg Bag) Sugar white (1 Kg Bag) Iodised salt (1 Kg bag) Family tents Plastic sheeting (60 m Roll) Kitchen set Blankets 50% (Bundle of 30) Jerrycan collapsible (40 per Box) Total

A/U kg kg litre kg kg kg piece piece piece piece piece

Weight/Kg 1 1 1 1 1 1 85 55 5 50 38

Opening Balance 339,900 262,312 12,214 33,042 7,071 2,357 213 30 512 1,230 520

In 1,000,000 0 100,000 100,000 0 0 0 0 0 0 0

Out 700,000 100,000 30,000 50,000 5,000 2,357 0 0 0 0 0

Closing Balance 639,900 162,312 82,214 83,042 2,071 0 213 30 512 1,230 520

Total Weight 639,900 262,312 82,214 83,042 7,071 2,357 18,105 1,650 2,560 2,050 494 1,101,755

Volume per 1 MT 1.5 2.0 1.7 1.5 1.5 1.5 3.4 3.5 5.0 4.4 7.9

Total Volume/ M3 959.85 524.624 139.7638 124.563 10.6065 3.5355 61.77 5.7 12.8 9.02 3.9 1856.1328

Area Needed/ M2 623.9025 341.0056 90.84647 80.96595 6.894225 2.298075 40.1505 3.705 8.32 5.863 2.535 1206.48632

The total Area needed for storage is calculated by following way: The total Volume can be derived by Total Weight in Kg divided by 1,000 multiplied by Volume per 1 MT. The Total Ares needed can be calculated by Total Volume divided by 2 and multiplied by 130%. In this case, the total area needed for new warehouse is 1,206.49 Sq. Meter for total volume of 1,856.13 Cub. Meter.

Criteria for Identification of New Warehouse Mugla is now under the danger of hurricane strike so we need to move our main warehouse to some other place in Betaland at least for the time being. Natrakona, a small town between Mugla and Dhetra is not a bad choice for us because it is not very far from the capital and it can access to Chagong easily by road. The Operations purpose and requirement mainly determine the design and management of a warehouse. The position of the warehouse in the humanitarian supply chain will affect the requirements for the operation. A permanent global warehouse can be set up and operated much like any commercial operation and can take advantage of the current best practices, equipment and systems in warehouse management. Selection of a New Location There are some important points to consider when deciding on the location of a new warehouse facility whether selecting a location for a temporary building or selecting from one of a number of existing buildings. In our case of moving Mugla warehouse, we should prefer to find one existing warehouse. The major factors to be reviewed are as follows: (1) PROXIMITY TO PORT OF ENTRY AND BENEFICIARIES The main reason of choosing a location of a warehouse is to minimize the total time that the goods take from their source to their ultimate destination. Location of a warehouse defines the efficiency and cost-effectiveness of a humanitarian operation. If the area in which the humanitarian aids activities happen is geographically close to the (air) port of entry, in that case the warehouse should obviously be located in the same area. Otherwise, in order to minimize the total costs and the effectiveness of the transportation, we should chose a location that has good transportation links to and from the warehouse. In our case, Mugla which is the best place for warehouse geographically close to a sea port, but now there is an impending danger of hurricane strike, we should find another option. I think that, as I have aforesaid, Natrakona can be a possible choice for us. It is not very far from Chagong where our sub office warehouse and temporary warehouses in the camps. If Bharat the hurricane will actually strike, it can put Mugla port operations under extreme pressure with volume of activity significantly exceeding what they were designed to handle. In such cases the obvious port of choice could lead to a bottleneck situation and a consequent breakdown in the supply chain. We should consider using another port of Betaland at Jumna, a port city located at north eastern part of the country. Jumna is not very far from Natrakona (about 240 km) and Dhetra (about 125 km) according to our map. Jumna can be our port of entry if Mugla port is devastated by the hurricane. Even Dhetra, the Capital, might be a potential location for our warehouse because it is nearer to the port of entry and it has various choices for good warehouses in commercial sector except with a higher rental price. (2) CHOOSING EXISTING BUILDINGS If we need to choose an existing building for our warehouse, we should check the following important points before renting it: The construction should be generally sound and waterproof. The building should have good system of ventilation. The inside walls should be clean and painted, preferably white. Doors and windows must be strong and secure. There should not be any sign of water leakage on the ceiling and roofing. There should not have any droppings and holes in the walls or floor for pest infestation.

The available space should normally be on the ground floor, with doorways which provide adequate access to the warehouse space, taking into account the method of moving the material that will be used. The warehouse size and shape must be assessed in advance and calculated in detail for its capacity to accommodate the quantity of material which will be handled. If we have to choose between larger space and smaller space, we must choose the former cramped conditions are difficult to operate in and keep tidy and increases in stock or activity may be difficult to accommodate. We must plan ahead for the future need of space for the supplies coming more. The floor area should be flat and made of a stable material, ideally concrete. The floor must be strong enough to support the weight of the material to be stored and the weight of any vehicles that will enter the building. Floor capacity will normally be expressed in kilograms per square meter (Kg/sq m). A typical ground floor building will have a floor capacity of 1000 3000 Kg/sq m but floors with basements or sanitary installations underneath will generally have a lower capacity. Most of our supplies are foodstuff so it may be necessary to have the building disinfected or fumigated by a professional cleaning company. One important thing not to miss is about the ownership of the building. Sometimes, ownership is a sensitive issue, especially more important in a conflict situation where our organizations neutrality may be compromised.\

On top of that, we need to check the following things are in proper order or not before renting a warehouse. Sufficient storage capacity available Availability over a specific period of time Suitable access and egress for trucks and vehicles Truck parking area Surrounding Social Environment Ventilation Lighting Hard Floor Fireproofing Loading docks Roofing condition Risk of Flooding Availability of Electricity and Water Telecommunication Generator availability Toilet Facilities Pallets and Pallets trucks Forklift availability Lockable Doors Window guards Perimeter fence for security External Lighting

(3) SECURITY MEASURES We must consider Security as a very important aspect of a warehouse to identify as our new warehouse. In terms of security we have to check the following points: The compound of warehouse should be protected by a fence or a wall Gates and doors must have high security level locks At least 3 shifts of watchmen must be put in place

Security staff must be well equipped with apparatus like torch lights, whistles and batons to protect the intruders Outside lamps at 4 sides of warehouse must be properly installed The warehouse must be equipped with fire extinguishers, sand buckets and other appropriate equipment. It is important to refer to local legislation. The local fire brigades are usually a source of good advice. Further people must be trained how to use such equipment.

(4) THE CONTEXT When selecting a location, we must also take into account the prevailing political, cultural or security situation of the particular area. The context here means political and socio-cultural. For a low profiled operation, we have to avoid making warehouse too much visible. But in our case, we need just a normal kind of warehouse that is not very low-profiles since SCILaid is an officially recognized humanitarian aid organization working in Betaland. (5) SITE CONDITION Another important aspect of a warehouses location is terrain. Some terrain might look fine in the dry season, but during the wet season it could become flooded or impossible to move vehicles around. If warehouses terrain is located in a valley or lowland, there will be drainage problems in the rainy season. A warehouse should not be very close to the chemical factory, nuclear power plant and a fuel reservoir to avoid potential danger of fire and chemical hazards. (6) ACCESS TO THE TRANSPORT FACILITIES Warehouse is only for temporary storage of the supplies; therefore we must consider the access to the site and make sure that suitable vehicles can reach the site easily and safely. Another thing is that the warehouse should be located at a convenient place of access to the railway station and roads.

Best Regards, Aung Kyaw Moe Logistics Officer Sub-Office (SCILaid Betaland)