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Warehouse service can provide benefits through enhanced revenue generation. When a warehouse is primarily justified on service, the supporting rationale is that sales can be increased, in part, by such logistical performance. i) Spot Stocking Spot stocking is typically used to support market distribution. Manufacturers of highly seasonal products often spot stock. Rather than maintaining inventory in a warehouse year-round, or shipping to customers direct from manufacturing plants, responsiveness in peak selling periods can be enhanced through temporary inventory positioning in strategic markets. ii) Full Line Stocking The full line stocking warehouse is more often restricted to a few strategic locations and operates year-round. Full line stocking warehouses improve service by reducing the number of suppliers that a customer must deal with. The combined assortments also make economical larger shipments possible. iii) Product Support Production support warehouses stock inventory to support manufacturing operations. Safety stocks on items purchased from outside vendors may be justified because of long lead times, potential supply discontinuity, and significant variations in usage rates. In production support warehousing, average inventory is higher and turnover is lower. iv) Market Presence While the market presence factor is a frequently discussed strategy, little solid research exists to confirm or refute its existence. In addition, more reliable transportation and technology-based order processing are closing the response time gap regardless of distance. Unless a warehouse is economically or service justified it is unlikely that local market presence will favorably influence operational results. 2. Key concepts and points Strategic Warehousing, Warehouse Functionality, Economic Benefits, Consolidation and Break-Bulk, Assortment, Postponement, Stockpiling, Reverse Logistics, Service Benefits, Spot Stocking, Full Line Stocking, Product Support, Market Presence 3. Issues of application While effective logistics system should not be designed to hold inventory for extended times, there are occasions when inventory is justified on the basis of cost and service. Students shall understand that an important change in warehousing is maximum flexibility, and know how such flexibility can be achieved through information technology.
In-storage handling consists of movements within the warehouse. Order selection is one of the major activities within warehouses. c) Shipping Shipping consists of order verification and transportation equipment loading 2) Storage The second consideration is that warehouse utilization should position products based upon individual characteristics. The most important product variables to consider in a storage plan are product volume, weight, and storage requirements. a) Active Storage Regardless of inventory velocity, most goods must be stored for at least a short time. Storage for basic inventory replenishment is referred to as active storage. b) Extended Storage A somewhat misleading term, refers to inventory in excess of that required for normal replenishment of customer stocks. 2. Key concepts and points Warehouse Operations, Handling, Receiving, In-Storage Handling, Shipping, Storage, Slots, Flow-Through, Cross-Dock Distribution, Active Storage, Extended Storage 3. Issues of application Warehouse operations consist of break-bulk, storage, and assembly procedures. The objective is to efficiently receive inventory, possibly store it until required by the market, assemble it into complete orders, and initiate movement to customer. This emphasis on product flow renders a modern warehouse as a mixing facility. As such, a great deal of managerial attention concerns how to perform storage to facilitate efficient materials handling.
3) Contract warehouse Contract warehousing combines characteristics of private and public operations. Contract warehouse operations can provide benefits of expertise, flexibility, scalability, and economies of scale by sharing management, labor, equipment, and information resources with multiple clients. 4) Deployment Strategy Developing a warehouse strategy requires answers to two questions. The first is how many warehouses should be established. The second question focuses on which warehouse ownership types should be used in specific markets. 2. Key concepts and points Private warehouse, Public warehouse, Contract warehouse 3. Issues of application As would be expected, many firms utilize a combination of private, public, and contract facilities. Full warehouse utilization throughout a year is rare. As a managerial guideline, a typical warehouse will be fully utilized between 75 and 85 percent of the time; so from 15 to 25 percent of the time, space needed to satisfy peak requirements will not be used. In such situations an attractive strategy may be the use of private or contract warehouses to cover the 75 percent requirement while using public facilities to accommodate peak demand. Students shall understand this concept.