Centralization vs. Decentralization in Warehouse and Returns Management

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Term Paper : Centralization Vs. Decentralization in warehouse and returns management

By Kyongnim Chea

August 02, 2011

1. Introduction

In this paper, centralization and decentralization in warehouse and returns management is investigated. An important characteristic of the centralized return centers is adapted to methodology via web-based access and electronic data interchange (EDI) for returns management to solve the problems. The interdependences between warehousing and returns department is considered for core components in a flexible and systematic manner. This paper is going to question on a key issue relative to managing warehouses and inventories at the companies. Do the company let warehousing and returns department manage their own warehouses or inventories or transfer credits to customers’ accounts, or do it create restocking the returned parts or products centrally for warehouse with only a minimum of input from the separate distribution centers? Prior to answer those question, several other issues will be discussed such as what is the optimal degree of centralization within a firm or what is the optimal degree of decentralization within a firm? To what extent should lower-level managers be given the authority to make a decision independently of higher-level management? In the case of returns and credits department, those questions take the form of how much discretion corporate headquarters should give to the managers. Should a tightly controlled set of operating procedures be mandated, or should warehouse and returns department managers be given considerable discretion with respect to operating their warehouses and returns department? How do they influence the relative performance of different organizational structures? The objective of this paper is to provide some insight into those questions.

This paper exams which organizational structure and management system can be formed in running warehouses and returns department even...
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