Bahrain Polytechnic
Assignment 1
Fatema Obaid
201101371
Contents
Introduction .................................................................................................................................................. 2
Purpose ..................................................................................................................................................... 2
Terms of Reference ................................................................................................................................... 2
Method ..................................................................................................................................................... 2
Company Profile............................................................................................................................................ 3
BG Supplies Ltd ......................................................................................................................................... 3
Bahrain Warehousing ............................................................................................................................... 3
Warehouse Description ................................................................................................................................ 4
Warehouse activities..................................................................................................................................... 5
Key Performance Indicators .......................................................................................................................... 9
Conclusion ................................................................................................................................................... 13
References .................................................................................................................................................. 14
Introduction
Purpose
The aim behind this report is to examine warehouse operation principles and design of the Bahrain
Warehousing and to assess the activities in the warehouse in order to have efficient operations. The
report will identify and explain the current situation of the warehouse, problems and key performance
indicators. In addition, recommendations and improvements will be discussed for each operation in the
warehouse. Finally, the customer service level will be identified and how it will improve when changes
are placed.
Terms of Reference
The report was requested by Mr. Hugh McDermott, Logistic Tutor at Bahrain Polytechnic. It will be
submitted to Mr. McDermott in the 30th of March as it was requested.
Method
The information in the report was gathered from different resources. Much information related to
principles was taken from the TLB6301 course sessions and notes. General information was collected
from articles from the internet.
Company Profile
BG Supplies Ltd
BG Supplies Ltd is a manufacturer that produces soft drinks and it is located in Saudi Arabia. BG
Supplies Ltd contracted with Bahrain Warehousing to supply number of supermarkets in Bahrain with its
goods. BG Supplies Ltd choose to have a contracted warehouse in Bahrain in order to provide buffer
stock in supply and demand, to enable value-adding process for customers by repacking, to provide an
interface for BG by recording receipts, inventory and dispatched goods and to protect stock from
damage and deterioration (CILT, 2010 a).
Bahrain Warehousing
Bahrain Warehousing is a third party logistics company that manages all operations of the
warehouse and distributes the goods to supermarkets. Bahrain warehousing has a contract with a
manufacturer, BG Supplies Ltd for the last ten years; this contract gives Bahrain warehousing the
responsibility of supplying 35 supermarkets in Bahrain with the products of BG Supplies Ltd which is soft
drinks. The warehouse of Bahrain warehousing has an economic and service function. The economic
function of the warehouse is through cross-docking where soft drink are brought from BG Supplies Ltd in
large quantities, then Bahrain warehousing arrange the products in smaller shipments and distributes
them in smaller quantities (CILT, 2010 a). The service functions are product mixing and production
support; product mixing is where several products are mixed based on the order of customers, for
example when customer orders different flavors of soft drinks, the flavor wanted are picked up and
consolidated as requested (CILT, 2010 a). Production support is to keep buffer stock and supply the
market when demanded, Bahrain warehousing helps in providing steady market of BG products as BG
Supplies Ltd is not located in Bahrain (CILT, 2010 a).
Warehouse Description
As Bahrain warehousing is a warehouse that store and supply the market with soft drinks which is
fast moving consumer goods, the frequency level of operations have to be fast to fulfill the demand of
supermarkets. The warehouse of Bahrain warehousing is operating using a “U” flow system where the
inbound and outbound are operated in one face of the building. The warehouse has four docks used for
receiving and dispatching goods. Many operations take place in the warehouse which was set to
facilitate the procedures of storing goods and fulfilling the customer’s orders (CILT, 2010 b). These
operations are inwards (receiving), materials handling, storage, order picking, collation, value-adding,
marshaling and dispatching. The goods reach to the warehouse in big units and then it is cut into small
unites and stacked on pallets. There is range of soft drinks that are stored in Bahrain warehousing which
are packed differently; Soft drinks in cans, plastic bottles, glass bottles and large bottles. This range of
products is stored using adjustable pallet racking in the warehouse (CILT, 2010 d); cases of product are
stacked on a pallet and then stored in racks. The racks are double-wide which allow to fast load and
unload two pallets at a time. There are two stories in the racks. Standard forklift (counterbalance) is
used in the warehouse as the aisles are wide to facilitate the movement of goods as they are fast
moving consumer goods (CILT, 2010 e). Most of the warehouse space is used for storage.
However, the Bahrain warehousing operator is concerned that the present operations situation of
the warehouse is not efficient and it is getting worse when more staff was employed. That is why the
operator of Bahrain warehousing conducted us “warehouse solutions” as a consulting company to
assess the function of the warehouse.
Warehouse activities
As mentioned above many operations take place in the warehouse to handle the products. Based
on the observations and data of the warehouse, many of the warehouse operations are facing problems
that are affecting on the efficiency of the warehouse and that ends up with a reduction in the customer
service level from 80% to 60% based on the complains from clients. The problems that are happening in
the warehouse operations are:
 Goods Inwards (receiving): the problem in the receiving area is that there are delays in
offloading containers due to the different level of height between the trucks and the
docks. Also, because the docks are shared for both the receiving and the dispatching
goods. This resulted in causing delays in storing goods.
 Materials handling: the problem in material handling is that the area of materials
handling is crowded with pallets that are just received or prepared for dispatching. The
process of breaking the big unit of received goods into small units is taking long time due
to the delays in offloading trucks.
 Storing (storage): due to the delays in the receiving area, the storing process also suffers
from delays as a consequence that the operations in the warehouse are linked. Also,
Clashes between staff that store goods and others that are picking orders makes the
situations worse and there is no enough space to store all the goods.
 Order picking: the operation of order picking is inefficient because of delays in order
storing and order replenishment. Also, many errors in picking wrong products causes
having stock out in some products. Also, employees are picking wrong products from
wrong racks which cause in repeating the process of picking. Furthermore, inefficient
scanners systems that broke several times are used in the picking area which results on
having delays in recording data.
 Collation and Value-adding: the problem in this operation is mainly caused by the delays
in the previous operations. Additionally, there is no variety in services provided and
customers are asking for other services.
 Marshaling and Dispatching: the dispatching operation is inefficient due to clashes
between goods received and dispatched resulted on having traffic jams and goods arrive
to supermarkets late. The different height of the warehouse floor and the truck caused
delays in loading goods to trucks. Also, the marshaling are is too crowded as it is shared
with the materials handling and receiving goods which causes in having delays in loading
trucks.
All these problems in the warehouse operations resulted in reducing the customer service level of
Bahrain warehousing from 80% to 60%. In order to Bahrain warehousing to meet the customer service
level and increase efficiency, number of improvements needs to be placed. Following are some
recommendations that would help in improving the efficiency of the warehouse operations in the short
term:
 Goods Inwards (receiving): the recommended improvements for the receiving area are to
prepare schedules where receiving goods and dispatching goods do not clash, for example
if the warehouse is operating from 8:00 pm to 8:00 am; the time should be set where
receiving goods are managed in the night between 8:00 pm to 1:00 am and the
dispatching operates after from 3:00 am to 8:00am; this would solve the problem of
clashes between received and dispatched goods.in addition, the problem of clashes
between received and dispatched goods could be solved by separating the docks where
number of docks for receiving and others for dispatching. The problem of the different
level of the docks and trucks should be solved to improve the frequency of offloading
trucks; ramps could be used in the short term to facilitate the process of offloading.
 Materials handling: when improvements are placed in the receiving operation, this will
lead to improvements in the materials handling as there would not be delays in breaking
the big units into small once. The space for handling goods needs to be separated from
other activities in order to have efficient work and reduce the time used in this operation.
 Storing (storage): the operation of storing goods will be improved by improving the
previous operations. In addition, organizing the goods from the materials handling will
facilitates the process of storing goods and will increase the speed of storing. Besides
that, the order cycle must be identify to ease the storing and records should be managed
to use FIFO (first in first out) as soft drinks has an expire data. Also, employees should be
trained on the proper way of using the equipment to store goods and another level of
raking could be used to utilize the height of the warehouse.
 Order picking: when the storing operation is improved the order picking will improve too;
as there would not be delays in picking orders because employees in picking area would
not face stock out due to delays in replenishment. However, employees in the order
picking area needs to be trained on how to pick goods and where to pick first and from
which rack; this would minimize the movement, eliminate ineffective time and reduce
error rates (CILT, 2010 f). Besides that, scanners system needs to be upgraded to facilitate
the process of recording order picked; barcode scanners could be used. This will result in
having more accurate data and records about the quantity of goods in the warehouse and
the quantity that will be dispatched.
 Collation and Value-adding: the collation activity will be improved by improving the
storing and picking operations. In addition, variety of value-adding services is needed to
fulfill their needs; a survey could be conducted to supermarkets on what value-adding
service they would have to hate in order to know which services to provide.
 Marshaling and dispatching: the docks used for dispatching goods needs to be separated
from the once used for receiving to not have clashes that would result in having traffic
jams. Also, schedules would improve the movements of dispatching as mentioned in the
receiving activity and fixing the floor level of docks to the trucks level or using ramps will
minimize the time used in dispatching goods. Finally, the marshaling area needs to be
separated from other activities to facilitate the process and not causing delays in
dispatching goods.
All these recommendations would result in improving the activities of the warehouse, increase the
efficiency, meet customer service levels and reduce costs. Furthermore, other improvements could be
placed for the long term to attract more business such as:
 Having more docks for receiving and dispatching to facilitate the movement of loading and
offloading products.
 Reconfigure some of the facilities of the warehouse to accommodate large number of products
and use the suitable raking to store them.
 Upgrade systems used in the warehouse and train employees on them to gain better utilization.
Key Performance Indicators
Based on assessing the warehouse operations and looking into data, it seems that the warehouse does
not use key performance indicators. Key performance indicators are a set of performance measures that
is used by business to measure performance and compare it to see how the performance is meeting the
operational goals ("Key Performance Indicators - KPI", 2015). In order to place recommendations for
improving performance we need first to identify the performance measures of the current situation for
each operation. Based on the data from the warehouse, the following measures are calculated:
 Receiving: the receiving area effect on the entire operations in the warehouse as it is the first
and many warehouse operators does not focus on (Stone, 2014). In the receiving area the
performance measure that will be use is; the time used to offload one pallet. In the present
situation the warehouse is receiving 350 pallets every day. There are 5 employees working in
offloading trucks. Each employee spends three hours and a half to offload 70 pallets; so each
pallet is offloaded in two minutes.
210/70=3 minutes per pallet.
Offloading one pallet in two minutes is a lot of time as it increases costs and cause delays
in the receiving area that is affecting the following operations. Offloading one pallet
should be done in half a minute based on the recommendations that will improve the
offloading process as following:
0.5mins*70pallet=70 minutes
70mins*5people=350 minutes = 6 hours
If the recommendations applied to the warehouse operations, the efficiency of receiving goods
will increase and the time taken to offload 500 pallets will reduce to four hours; which will lead in
increasing the productivity of employees.
Another KPI for the receiving area is truck time at the dock (Stone, 2014). At the main time the
truck stays at the dock for long time as the process of offloading takes long time. When
improvements are placed by equaling the level of the dock to the level of the truck, this will faster
the process of offloading foods and would result on minimizing the time of the truck at the dock.
 Materials handling: after receiving goods, the goods need to be prepared to be stored. In the
main time, the warehouse is taking long time in the material handling operation which results in
delays in the storage and order picking. 350 pallets received every day is taking more than six
hours to be moved to the storing area; which is more than the median average ("Warehouse
Performance Metrics", 2007). In order to measure the time taken in the materials handling we
will use dock to stock cycle time as a performance measure. As we mentioned above, the area is
crowded as it is used with other operations such as marshaling goods to dispatch; and this is the
main reason that materials handling is taking long time. However, by determining specific place
to be used for materials handling, the time of activities in this area will reduce as their will be
utilization for space. For example, 350 pallets take almost 7 hours before it is moved to the
storing area at the main time which is long time; by determining a space for materials handling,
training employees on how to increase their productivity and upgrading the systems of the
warehouse, the to dock to stock cycle time will be reduce to almost four hours based on the
data.
 Storage: goods need to be stored after it is handled; however, the storing area is facing
problems as mentioned above. The key performance indicator that will be used to measure the
utilization of the storage area is space utilization. Goods are stored in ranking system on pallets
which is good to ease the movement of products. However, the ranking system in the
warehouse consists of double levels only; which lead to not having enough space for goods.
Besides, more business could not be considered at the main time. However, by utilizing the
height of the warehouse and increasing the stories of rakings will lead to utilizing the space,
storing more goods and more business can be considered.
Another KPI could be used to measure the performance in the storage area is number of Pallets
stored per hour. For example, at the main time the storing 350 pallets are done in 12 hours
which is the operating time because of the delays in receiving and materials handling. However,
this could be minimized to the half by implementing the improvements recommended above
and by improving the previous operations.
 Order picking: the order picking is the most difficult and expensive operation as it consumes
large number of labors (Stone, 2014). As been identified in the problems of the order picking,
the process is inefficient and many errors occur. The performance measure that would be used
to measure the accuracy of the order picking is order picking accuracy. There are errors
occurring in the warehouse because of problems in storing goods (goods are not stored in its
place) and employees are not trained well on where to pick first; this resulted in having stock
out in certain shelves. As an example for the KPI, at the main time errors are occurring because
the recording systems are not upgraded (scanners); if the recommended improvements are
placed, the errors will minimize until it does not exist and this will occur by training employees
well.
Another key performance indicator for the order picking process is the cycle time per order.
This indicator will measure the average time used in performing an order line picking. Because
there are problems in the warehouse, inefficient order picking process is happening. For
example, at the current time employees in the order picking area went to pick orders but they
do not find products to pick because there is stock out due to the delays in the storage area.
However, when placing the improvements recommended this situation will not appear; besides,
there should be some training for employees in order not to pick wrong products from wrong
shelves.
 Dispatching: the dispatching process affects directly on the satisfaction of the customers as any
delays in dispatching orders will result in delays in transporting the products to customers. The
key performance indicator that would be used in the dispatching is number of orders shipped
per hour. The number of orders shipped per certain time identifies the productivity of
dispatching. For example, at the main time every hour one order is dispatch and sent to
customer due to the problems in the warehouse and delays in loading trucks. When the
improvements are placed the situation will change. As to the information, if we have 4
employees that need to load 300 pallets to be send to 35 supermarkets; at the main time an
order of 10 pallets is loaded in almost 8 hours. However, the efficiency and productivity will
increase when improvements are placed and more number of orders will be sent in an hour.
Conclusion
In the conclusion, the recommended improvements and key performance measures will increase the
efficiency of the Bahrain Warehousing warehouse and it will reduce costs of employing more staff or
managing operations.in addition, the customer service level will increase as the warehouse operations
will not be having same problems of the main time. When the warehouse operations are managed,
Bahrain warehousing could gain more business.
References
Websites:
"Warehouse Performance Metrics". (2007). Retrieved from Maves:
http://www.maves.com/blog/warehouse-performance-metrics/
"Key Performance Indicators - KPI". (2015). Retrieved from Investopedia:
http://www.investopedia.com/terms/k/kpi.asp
Stone, S. (2014, April 5). Warehousing Key Performance Indicators. Retrieved from Cisco-eagle:
http://www.cisco-eagle.com/blog/2014/04/05/warehousing-key-performance-indicators/
Sessions:
Chartered Institute of Logistics and Transport. (2010) a: (session1) “Introduction to Warehousing”.
Retrieved from Moodle database, Bahrain Polytechnic
Chartered Institute of Logistics and Transport. (2010) b: (session2) “Warehouse Operating Functions”.
Retrieved from Moodle database, Bahrain Polytechnic
Chartered Institute of Logistics and Transport. (2010) d: (session4) “Storage in Warehouse”. Retrieved
from Moodle database, Bahrain Polytechnic
Chartered Institute of Logistics and Transport. (2010) f: (session6) “Order Picking”. Retrieved from
Moodle database, Bahrain Polytechnic
Chartered Institute of Logistics and Transport. (2010) e: (session7) “Aisle Width and Equipment
selection”. Retrieved from Moodle database, Bahrain Polytechnic