Warehousing in Supply Chain

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WAREHOUSING IN SUPPLY CHAIN

Introduction

Warehousing is one of the most important and critical logistic activities in industrial and service systems. A few production philosophies, e.g. just in time (JIT) and lean manufacturing, propose and support the so-called ‘‘zero stock’’ as basic and strategic pillar. Also manufacturing requirement planning (MRP), the well known and widely adopted ‘‘push-’’ based fullfilment technique, theoretically guarantees no storage quantities when the ‘‘lot for lot’’ reorder policy is adopted. Nevertheless, these special production systems do not operate in absence of warehousing systems that support and smooth the discontinuity flow of materials, products and components, at the input and at the bottom of a generic production stage.

Warehousing activities and storage systems are necessary! This is true in many industrial and not industrial sectors: from automotive to tile industry passing from food industry, health care production systems, service sectors (e.g. banks, universities, hospitals), etc. Obviously, warehousing is the core activity of logistic providers, usually specialized in distribution activities including storage and transportation issues. In special sectors, like the food industry and the health care supply chains, warehousing means storage systems in critical operating conditions, e.g. controlled temperature and/or humidity levels, by the management of fresh and perishable products.

The storage systems significantly affect the level of quality of products, the customer’s service level, and the global logistic cost. Just an example: the food industry. Warehousing and transportation issues significantly affect the level of quality of foodstuffs at the consumer’s location, especially when production plants and final points of demand (consumers’ locations) are far away and frequently located in different countries.

The mission of warehousing is the same of the discipline ‘‘logistics’’: to effectively ship products in the right place, at the right time, and in the right quantity without any damages or alterations. Important keywords in warehousing and storage systems are: safety, quality, availability, cost saving, customer service level, traceability, picking, automation, fulfillment, travel time, etc.

With increased globalization and offshore sourcing, global supply chain management is becoming an important issue for many businesses. Global supply chain management involves a company’s worldwide interests and suppliers rather than simply a local or national orientation. This is the operational arena of warehouses in most complex production systems.

THE ROLES OF WAREHOUSE IN THE SUPPLY CHAIN

Warehouse play vital roles in the supply chain. The warehouse is not only a facility where a company can store their products, but the warehouse offers inventory management, physical inventory counts and shipping functionality. The warehouse charges their clients for a certain rate for the goods stored, the volume of the warehouse used and the services the client wishes to use. The company using the warehouse does not have to employ warehouse staff, does not require any inventory software or warehouse equipment. The owner of the warehouse is responsible for the costs and passes this on to their clients based on the rate they are charged.

The warehousing functionality today is much more than the traditional function of storage. The main function that warehousing serves today are hold raw material at or near the point of induction into a manufacturing or assembly process. The work-in-process warehouses hold partially completed assemblies and products at various points along an assembly or production line. Besides, the finished goods warehouse hold inventory used to balance and buffer the variation between production and schedules and demand. For this purpose, the warehouse is usually located near the point of manufacture and is often...
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