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236 CHAPTER 7 Inventory and Warehouse Management Processes

materials are managed only at the storage location level, the company uses a
goods receipt to record the receipt of the materials, which are then placed in
the specifi ed storage location. When WM is enabled, however, additional steps
must be completed. We will discuss these steps later in the chapter. For now,
the key point is that until these WM steps are completed, the materials are
placed in specially designated storage types that serve as interim storage
areas in the warehouse (e.g., a receiving area). Interim storage areas are also
utilized in the fulfi llment process when the materials are to be shipped from a
warehouse managed storage location. These areas represent the physical links
between IM and WM. Figure 7-9 includes one storage type for shipping and
one for receiving.

STORAGE SECTION
Storage types can be further divided into storage sections, which group bins
with similar characteristics. Examples of storage sections are fast-moving,
slow-moving, heavy, light, large, and small. An organization may have some
materials that are shipped out very soon after they are received in the ware-
house. These materials are designated as fast-moving materials, and, logically,
they should be placed close to the receiving and shipping areas. In contrast,
slow-moving materials, which remain in the warehouse for long periods before
being shipped out, should be stored further away. In Figure 7-9, the pallet area
is divided into slow-moving and fast-moving storage sections.
Storage sections can also be based on the material’s weight or size. For
instance, in a shelf area, heavy and bulky materials are placed in lower shelves,
and lighter and smaller materials are stored in higher shelves. Thus, a shelf
storage area can be divided into heavy and light storage sections, as depicted
in Figure 7-9. The receiving and shipping storage areas have one storage sec-
tion each, the total section. Each storage type must include at least one storage
section.
Finally, Figure 7-9 shows three storage bins within the light storage
section. Storage bins are areas in which the materials are actually stored. We
discuss storage bins in the section on master data.

PICKING AREA
Storage areas can be divided into picking areas rather than storage sections.
A storage section is a division of a storage area based on storing or putting
away materials. In contrast, a picking area is a division of a storage area based
on removing or picking materials. A picking area groups storage bins based on
similar picking strategies. For example, picking areas can be assigned to spe-
cifi c employees who are responsible for picking from the specifi ed bins. As
another example, a delivery to a customer can be allocated to multiple picking
areas to facilitate parallel picking. This arrangement makes the picking step
more effi cient, and it enables the company to deliver the materials to the cus-
tomer more quickly.
Figure 7-10 displays the layout of GBI’s San Diego distribution center,
and Figure 7-11 displays its structure. GBI has two storage types—shelf storage
(001) and pallet storage (002)—and two interim storage types—receiving (003)

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