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Study Current Warehouse Operations and
Suggest Efficient Cost Saving Solutions

Issac Solomon

Indian Institute of Management
April-May, 2014
Study Current Warehouse Operations and
Suggest Efficient Cost Saving Solutions

Issac Solomon

Under the guidance of

Shri Santhosh D Nair Dr.Parikshit Charan
Group Warehouse Manager Professor
EMEL Group, Lagos, Nigeria IIMR, Raipur

Indian Institute of Management
April-May, 2014
Certificate of Approval

The following Summer Internship Report titled "Study Current Warehouse Operations and Suggest Efficient Cost Saving Solutions" is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post-Graduate Programme in Management for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Internship Report only for the purpose it is submitted.

Summer Internship Report Examination Committee for evaluation of Summer Internship Report

1. Faculty Examiner
2. PGP Summer Internship Co-coordinator

Certificate from Summer Internship Guides

This is to certify that Mr.Issac Solomon, a student of the Post-Graduate Programme in Management at Indian Institute of Management Raipur, has worked under our guidance and supervision. This Summer Internship Report has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other summer Internship, monograph, report or book.

Dr.Parikshit Charan Shri.Santhosh D Nair
Professor Group Warehouse Manager
IIMR, Raipur EMEL Group
10-June-2014 106, UBA Building, Ijora Lagos, Nigeria


Study Current Warehouse Operations and
Suggest Efficient Cost Saving Solutions
Issac Solomon
Warehousing is an activity which involves storage of goods and materials. It is associated with functions like receipt, identification, inspection, verification, putting away, retrieval for issue, etc. Though warehousing is a non-value adding activity, for companies who deal with large volumes of products, warehousing proves to be a critical. If not carefully practised, warehousing can become a big burden to any company by increasing overhead costs. It could increase overhead costs by increasing the holding cost and other costs associated with transportation and labour. Companies have started understanding that warehouse operations needs to be lean and optimum as it can have impact not only to the company but through the supply chain. This research involves analysing the existing warehouse operations in the EMEL warehouses and identifying possible practical solutions to improve these warehouses. The study was performed in four phases: 1. Study of existing processes

2. Identifying potential improvements over the existing systems and processes within the warehouses 3. Doing a feasibility study within the warehouse for the proposed recommendations. 4. Providing a time frame to implement these recommendations. Based on the study conducted on the existing processes, some major inefficiencies were found. There was no fixed layout within the warehouse, no specific storage system, no specific audit system was in place and goods where not stacked optimally. These problems lead to a wastage of a lot of space. The problem was to identify a solution which would reduce all these inefficiencies and improve the processes to a more lean and optimum warehousing. A set of recommendations were given and a time frame of 4 months given for implementing them. Layout designs were developed to improve space utilizations. An audit checklist was developed to ensure that the warehouse will always function optimally. Further a storage system based on movement of objects was recommended and where similar SKUs are always stacked together within the same warehouse. Labour empowerment and implementation of 5s were also recommended solutions.


With immense gratitude I would like to present this project which details with warehouse operations as its base work. It has been a deeply enriching experience to undergo my Summer Internship Program at EMEL group in Nigeria. To be given this opportunity to work in a new environment has helped me understand business in a whole new perspective. I would like to express my sincere thanks to all those people who helped me and guided me through these two months in making this project a success. I would like to express my special gratitude to Mr.Naresh Asnani, CEO EMEL Group and Mr.Mahesh Asnani, Managing Director EMEL Group for their constant support and encouragement which helped me throughout the project. Also a sincere thanks to Mr.Mahesh Rudrappa for the trust he had in me and selecting me for this internship. I would also like to express my deep sincere appreciation to Mr. Santhosh D Nair who spent his invaluable time to answer all my queries and guiding me in the right path to complete this project. I would like to express my sincere thanks to my faculty mentor, Dr.Parikshit Charan for providing his valuable inputs which guided me in the successful completion of this summer internship. I sincerely acknowledge him for extending his valuable guidance, support, reviews on the report and above all the moral support before and during the internship.

(Signature of the Student)

Name : Issac Solomon
Roll No : 13PGP020

Abstract v
Acknowledgement vii
Table of Contents viii
List of Figures xi
List of Tables xiii
List of Abbreviations xv
1. Introduction 1
1.1 The EMEL Group 1
1.2 The EMEL Product Portfolio 2
1.3 Warehouse Management 2
1.4 Problem Formulation 4
1.4.1 Background of the Problem 4
1.4.2 Objectives 5
1.4.3 Importance of Study 5
1.4.4 Problem Definition 6
2. Research Methodology 7
2.1 The Research Problem 7
2.2 The Research Decision 8
2.2.1 Research Method Adopted 8
2.2.2 Source of Data 8
2.2.3 The Research 9 ABC Analysis 9 FMS Analysis 13 Existing Warehouse Layout 13 Existing Storage System 16 Poor Inventory Control 17 Forecasting Sales 20 Booked Order Reference 27 Offloading Process 30 Space Utilization 35 Logistics Documentation 37 Invoice 38 Payment Terms 39 Packing List 41 Bill of Lading 43
3. Recommendations 44
3.1 Warehouse Layout 44
3.2 Space Utilization and Cost Analysis 51
3.3 Inventory Master-List 58
3.4 Location Storage System 62
3.5 Offloading 63
3.6 Audit Checklist 65
3.7 Vertical Stacking 68
3.7 Action Points for next 6 months 71
References 69
Figure No. Description Page No.
2.1 ABC Analysis Graph 9
2.2 Existing Ericcmore Layout 15
2.3 Poor Storage System I 16
2.4 Poor Storage System II 17
2.5 Offloading I 31
2.6 Offloading II 32
2.7 Offloading III 33
2.8 Offloading IV 34
2.9 Process flow – Offloading 35
2.10 Invoice – I 38
2.11 Invoice – II 39
2.12 Document against Acceptance process 40
2.13 Packing List 42
2.14 Bill of Lading 43
3.1 Ericmore Warehouse A Layout 45
3.2 Ericmore Warehouse C Layout 46
3.3 Ericmore Warehouse B Layout 47
3.4 Matori Warehouse Layout 48
3.5 Amouho Odofin Warehouse 49
3.6 Doyin Warehouse Layout 50
3.7 Space between stacking 56
3.8 Aisle space 57
3.9 Offloading in proposed Layout 64
3.10 Weak Carton I 69
3.11 Weak Carton II 70
3.12 Weak Carton III 70

Table No. Description Page No.
1.1 Product Portfolio 2
2.1 ABC Analysis of Ericcmore Stock (Household items) 10 2.2 FMS analysis 13
2.3 Poor Inventory Control 18
2.4 Sales data for March for Stoneware 21
2.5 Ideal Sales and stock 22
2.6 Closing stocks at the end of a month 23
2.7 Forecast for the month of April 24
2.8 Forecast for the month of May 25
2.9 Forecast for the month of June 26
2.10 Booked order reference 1 27
2.11 Booked order reference 2 28
2.12 Booked order reference 3 29
2.13 Booked order reference 4 30
2.14 Products based on the space occupied by a TEU 37
3.1 Space Utilized for proposed layout 51
3.2 Volume occupied (in ft3) 51
3.3 Number of 28m3 containers that can be stored in the B warehouse 52 3.4 Space Utilization as per existing method 52
3.5 Physical space Utilization Calculations 53
3.6 Space utilization vs Aisle space 54
3.7 Volume occupied within warehouse 55
3.8 Container Volume 55
3.9 Cost saved per container if proposed layout is accepted 55 3.10 Master-list of all products in the respective warehouse 58 3.11 Product division in each warehouse 61
3.12 Product Category for three Warehouse 61
3.13 Location Storage System 62
3.14 General warehouse Audit Checklist 65
3.15 HOD warehouse Audit Checklist 67


TEU Twenty ft. Equivalent Unit
UOM Unit of Measurement
SKU Stock keeping Unit
FMS Fast Medium and Slow Moving
HH Household
CS Corporate Sales
BM Building Materials
PS Power Solutions
FIFO First In First Out
ETA Estimated Time of Arrival
B/L Bill of Lading
B/E Bill of Exchange
FCLS Full Container Load Shipment
D/A Delivery against Acceptance
FOB Freight on Board

1.1 The EMEL Group
EMEL Group of businesses is a diversified group and has a major presence over a variety of sectors including consumer products, corporate services and infrastructure. The company primarily sells its products within Nigeria, mostly imported from other countries like China, Turkey etc. They also have a factory in Lagos which acts as an assembling unit for their office chair business. The company’s is sole supplier of a vast selection of consumer and industrial sewing machines sold under the butterfly brand in Nigeria and its surrounding countries. Though sewing machines is the company’s flagship product, the company also has a strong hold in the consumer goods market for household items like glassware, ceramics, etc, in building materials which include roofing tiles, doors, etc. and also sells corporate gifts which has a big market in Nigeria. EMEL group always looks out for opportunities to expand its portfolio and has recently entered the solar solutions in the power sector. EMEL is focused more towards cutting cost and achieving cost leadership in the products it sells. This is because of the fact that Nigeria is a very cost sensitive market. As company already faces huge unavoidable costs in the form of logistics and sourcing while importing the products from other countries, the company believes if it can reduce its cost in the internal operations, it would generate a competitive advantage in the fast growing Nigerian economy. Warehousing in one such department where EMEL believes it could cut down costs. The company has a total of 6 warehouses spread across Lagos. The total combined space exceeding 180,000 sq. ft. It has the warehouses in the following locations: Ericcmore - 37542 sq. ft.

Matori - 39800 sq. ft.
Mile 2 - 35000 sq. ft.
Amou Odofin - 28000 sq. ft.
Kir Kiri - 34139 sq. ft.
Doyin - 7000 sq. ft.

1.2 The EMEL Product Portfolio
The following consists of EMEL’s complete product portfolio

Table 1.1 Product Portfolio
1.3 Warehouse Management
A warehouse is a planned space for the storage and handling of goods and materials. Warehousing refers to the activities involving storage of goods on a large-scale in a systematic and orderly manner and making them available conveniently when needed. In other words, warehousing means holding or preserving goods in huge quantities from the time of their purchase or production till their actual use or sale. Warehousing is actively involved in the supply chain. In demand driven supply chains (EMEL being part of one), warehousing may be mainly for storing goods, or involve more sorting activities, both being required to largely feed customers. In the supply-driven supply chains, the warehouses get renamed as stores and hold stocks required to feed internal activities like production. Supply chain can be called as the process that integrates, coordinates and controls the movement of goods and materials from a supplier to a customer to the final consumer. And warehousing acts as a buffer between these links. In a warehouse more than storing sorting and throughput are key indicators of performance. Effective and efficient use of time and space is critical. Warehouse managers are responsible for planning of all the warehouse activities including receiving, sorting, assembling, kitting, picking and the dispatching of orders. Warehousing is costly in terms of human resources and of the facilities and equipment required, and its performance will affect directly on overall supply chain performance. Inadequate design or managing of warehouse systems will jeopardize the achievement of required customer service levels and the maintenance of stock and would result in high costs which could have been avoided. For a company like EMEL, which strategizes itself as a cost leader, it will be difficult if it cannot implement warehousing techniques efficiently. The recent trends and pressures on supply chain / logistics with more focus on customer service levels, inventory optimization, time compression and cost minimization, things have inevitably changed the ...

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