warehousing of deodorants
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I was involved in a debate about the purpose of warehousing last week and I realised that many people do not understand how warehousing adds value to an organisation. People realise that warehousing provides storage of finished goods and work in progress but they do not realise the other important functions provided by warehousing. This short article seeks to increase the understanding of how warehousing adds value
Warehousing is:-
‘the part of the logistics system that stores product at and between the point of origin and point of consumption and provides information to management on the status, condition and disposition of items being stored’
In order to understand the value adding ability of warehousing we must understand why companies store product. Companies store product to enable them to:-
Gain transport or production economies. Warehousing assists in these aims by allowing production runs to be larger and by allowing large consignments to be prepared for shipping or by allowing break or make bulk operations
Take advantage of bulk buying economies. Warehousing assists in this by allowing the storage of bulk purchased items that are not needed until some future date
To maintain a source of supply. This is necessary if long lead times are needed for the supply of components or products or as a buffer against demand fluctuation
To support customer service policies. Warehousing achieves this by allowing customer orders to be supplied from stock rather than from production therefore reducing customer lead time
To manage demand fluctuations. This is especially important where large peaks in sales occur and the production process is not able to cope
Support JIT programmes of customers and suppliers
In addition to the roles necessitated by the storage of inventory warehousing also assist in reducing overall supply chain costs by:-
Consolidation for outward distribution. This involves combining products from several warehouses / manufacturing facilities into a single shipment for a final customer at a central warehouse. Such services are often used by Supermarkets who for cost reasons would rather take one delivery of 26 pallets from multiple suppliers than 26 deliveries of one pallet from multiple suppliers they therefore nominate a consolidation agent to perform the consolidation for them
Consolidation Warehouse
Breakbulk – This involves several orders being consolidated at a manufacturing plant or central warehouse and sent to a breakbulk warehouse where they are broken down into individual orders and distributed. Such operations are often used in situations where a central warehouse is used in combination with regional spokes who do local deliveries in the regions for example a central warehouse in the Midlands could utilise a regional spoke in the South West of England to do its deliveries in regions such as Cornwall, Devon and Exeter
Break Bulk Operations
Break Bulk Operations
Product Mixing – Multiple production facilities produce part of the final product, these facilities ship the goods to the product mixing warehouse who combine the product before distribution to the customer.
Reverse logistics. Warehouses allow companies to manage their returns. It is now common for specialist warehouse operations to be used to recover the value left in returns by correcting issues (if any exist) and putting the product back on sale.
Late product customisation. Increasingly product is kept in vanilla form until the last moment and then altered according to customer demand. This has significant advantages in terms of forecast accuracy and supply chain agility. A good example of this is Christmas gift sets which are stored as separate deodorant, aftershave and shower gel until orders are received from a retailer they are then combined and sold as a gift set.
Late Product Customisation
Warehousing assists in these aims via the three basic warehouse functions described below – movement, storage and information transfer.
Movement
Movement includes any business operation within the warehouse which involves moving a physical item. It therefore includes a variety of different activities such as:-
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